[Federal Register Volume 85, Number 219 (Thursday, November 12, 2020)]
[Rules and Regulations]
[Pages 72158-72310]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-24591]



[[Page 72157]]

Vol. 85

Thursday,

No. 219

November 12, 2020

Part IV





 Department of the Treasury





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Internal Revenue Service





 Department of Labor





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 Employee Benefits Security Administration





 Department of Health and Human Services





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26 CFR Part 54

29 CFR Part 2590

45 CFR Parts 147 and 158





 Transparency in Coverage; Final Rule

  Federal Register / Vol. 85 , No. 219 / Thursday, November 12, 2020 / 
Rules and Regulations  

[[Page 72158]]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 54

[TD 9929]
RIN 1545-BP47

DEPARTMENT OF LABOR

Employee Benefits Security Administration

29 CFR Part 2590

RIN 1210-AB93

DEPARTMENT OF HEALTH AND HUMAN SERVICES

45 CFR Parts 147 and 158

[CMS-9915-F]
RIN 0938-AU04


Transparency in Coverage

AGENCY: Internal Revenue Service, Department of the Treasury; Employee 
Benefits Security Administration, Department of Labor; Centers for 
Medicare & Medicaid Services, Department of Health and Human Services.

ACTION: Final rule.

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SUMMARY: The final rules set forth requirements for group health plans 
and health insurance issuers in the individual and group markets to 
disclose cost-sharing information upon request to a participant, 
beneficiary, or enrollee (or his or her authorized representative), 
including an estimate of the individual's cost-sharing liability for 
covered items or services furnished by a particular provider. Under the 
final rules, plans and issuers are required to make this information 
available on an internet website and, if requested, in paper form, 
thereby allowing a participant, beneficiary, or enrollee (or his or her 
authorized representative) to obtain an estimate and understanding of 
the individual's out-of-pocket expenses and effectively shop for items 
and services. The final rules also require plans and issuers to 
disclose in-network provider negotiated rates, historical out-of-
network allowed amounts, and drug pricing information through three 
machine-readable files posted on an internet website, thereby allowing 
the public to have access to health coverage information that can be 
used to understand health care pricing and potentially dampen the rise 
in health care spending. The Department of Health and Human Services 
(HHS) also finalizes amendments to its medical loss ratio (MLR) program 
rules to allow issuers offering group or individual health insurance 
coverage to receive credit in their MLR calculations for savings they 
share with enrollees that result from the enrollees shopping for, and 
receiving care from, lower-cost, higher-value providers.

DATES: 
    Effective date: The final rules are effective on January 11, 2021.
    Applicability date: See the SUPPLEMENTARY INFORMATION section for 
information on the applicability dates.

FOR FURTHER INFORMATION CONTACT: Deborah Bryant, Centers for Medicare & 
Medicaid Services, (301) 492-4293. Christopher Dellana, Internal 
Revenue Service, (202) 317-5500. Matthew Litton or Frank Kolb, Employee 
Benefits Security Administration, (202) 693-8335.
    Customer Service Information: Individuals interested in obtaining 
information from the Department of Labor (DOL) concerning employment-
based health coverage laws may call the Employee Benefits Security 
Administration (EBSA) Toll-Free Hotline at 1-866-444-EBSA (3272) or 
visit DOL's website (http://www.dol.gov/ebsa). In addition, information 
from HHS on private health insurance for consumers can be found on the 
Centers for Medicare & Medicaid Services (CMS) website (www.cms.gov/cciio) and information on health reform can be found at http://www.healthcare.gov.

SUPPLEMENTARY INFORMATION: 

I. Background

    The final rules require group health plans and health insurance 
issuers in the individual and group markets to disclose cost-sharing 
information upon request, to a participant, beneficiary, or enrollee, 
which, unless otherwise indicated, for the purpose of the final rules 
includes an authorized representative, and require plans and issuers to 
disclose in-network provider rates, historical out-of-network allowed 
amounts and the associated billed charges, and negotiated rates for 
prescription drugs in 26 CFR part 54, 29 CFR part 2590, and 45 CFR part 
147. HHS also finalizes amendments to its MLR program rules in 45 CFR 
part 158.

A. Statutory Background and Enactment of PPACA

    The Patient Protection and Affordable Care Act (Pub. L. 111-148) 
was enacted on March 23, 2010, and the Health Care and Education 
Reconciliation Act of 2010 (Pub. L. 111-152) was enacted on March 30, 
2010 (collectively, PPACA). As relevant here, PPACA reorganized, 
amended, and added to the provisions of part A of title XXVII of the 
Public Health Service (PHS) Act relating to health coverage 
requirements for group health plans and health insurance issuers in the 
group and individual markets. The term group health plan includes both 
insured and self-insured group health plans.
    PPACA also added section 715 to the Employee Retirement Income 
Security Act of 1974 (ERISA) and section 9815 to the Internal Revenue 
Code (Code) to incorporate the provisions of part A of title XXVII of 
the PHS Act, PHS Act sections 2701 through 2728, into ERISA and the 
Code, making them applicable to group health plans, and health 
insurance issuers providing coverage in connection with group health 
plans.
1. Transparency in Coverage
    Section 2715A of the PHS Act provides that group health plans and 
health insurance issuers offering group or individual health insurance 
coverage must comply with section 1311(e)(3) of PPACA, which addresses 
transparency in health coverage and imposes certain reporting and 
disclosure requirements for health plans that are seeking certification 
as qualified health plans (QHPs) that may be offered on an Exchange. A 
plan or coverage that is not offered through an Exchange (as defined by 
section 1311(b)(1) of PPACA) is required to submit the information 
required to the Secretary of HHS and the relevant state's insurance 
commissioner, and to make that information available to the public.
    Paragraph (A) of section 1311(e)(3) of PPACA requires a plan 
seeking certification as a QHP to make the following information 
available to the public and submit it to state insurance regulators, 
the Secretary of HHS, and the Exchange:

 Claims payment policies and practices,
 periodic financial disclosures,
 data on enrollment,
 data on disenrollment,
 data on the number of claims that are denied,
 data on rating practices,
 information on cost-sharing and payments with respect to any 
out-of-network coverage, and
 information on enrollee and participant rights under Title I 
of PPACA.

Paragraph (A) also requires a plan seeking certification as a QHP to 
submit any ``[o]ther information as determined appropriate by the 
Secretary.''

[[Page 72159]]

    Paragraph (C) of section 1311(e)(3) of PPACA requires plans, as a 
requirement of certification as a QHP, to permit individuals to learn 
the amount of cost sharing (including deductibles, copayments, and 
coinsurance) under the individual's coverage that the individual would 
be responsible for paying with respect to the furnishing of a specific 
item or service by an in-network provider in a timely manner upon the 
request of the individual. Paragraph (C) specifies that, at a minimum, 
such information must be made available to the individual through an 
internet website and through other means for individuals without access 
to the internet.
    Together these statutory provisions require the overriding majority 
of private health plans \1\ to disseminate a substantial amount of 
information to provide transparency in coverage. The portions of the 
final rules that require plans and issuers to disclose cost-sharing 
information upon request, to a participant, beneficiary, or enrollee 
implement paragraph (C) of section 1311(e)(3) of PPACA. The portions of 
the final rules that require plans and issuers to disclose in-network 
provider rates, historical out-of-network allowed amounts and the 
associated billed charges, and negotiated rates for prescription drugs 
implement paragraph (A) of section 1311(e)(3) of PPACA. The 
requirements to disclose out-of-network allowed amounts specifically 
implements the requirement in section 1311(e)(3)(A)(vii) to provide 
information on ``payments with respect to any out-of-network 
coverage.'' In addition to payment information on out-of-network 
charges, the Secretary of HHS determined that payment information on 
in-network rates and prescription drugs is also appropriate information 
to require plans and issuers to disclose to provide transparency in 
coverage under section 1311(e)(3)(A)(ix).
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    \1\ As of 2018, private, non-grandfathered health plans that 
must comply with these statutory provisions covered more than 92 
percent of the almost 177 million people covered by private health 
coverage. The remaining 7.7 percent were covered by grandfathered 
health plans or were enrolled in short-term limited duration 
coverage or health care sharing ministries. See Kaiser Family 
Foundation, Health Insurance Coverage of the Total Population in 
2018, https://www.kff.org/other/state-indicator/total-population/?dataView=1&currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D, last accessed October 5, 2020.
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    PPACA's transparency in coverage requirements were enacted in 
coordination with a set of requirements that transformed the regulation 
of private market health plans and issuers. These requirements for the 
first time apply a comprehensive framework for regulating private 
health coverage through Federal law.\2\ Prior to PPACA, Federal law 
relied on states to be the primary regulators of health insurance, but 
applied only a limited set of Federal requirements to govern private 
health coverage. Where Federal law regulated private health coverage, 
there was a substantial variation in how these regulations applied, 
depending on whether private health coverage was self-insured group 
coverage, large group insurance coverage, small group insurance 
coverage, or individual insurance coverage. To establish a 
comprehensive framework for regulating private health coverage, PPACA 
first set out a series of requirements on ``Improving Coverage'' that 
generally apply to group health plans and health insurance issuers 
offering group or individual health insurance coverage.\3\ These 
requirements ranged from the prohibition on lifetime or annual dollar 
limits in section 2711 of the PHS Act to the requirement to cover out-
of-network emergency services in section 2719A of the PHS Act and 
include the transparency in coverage requirements in section 2715A of 
the PHS Act.\4\ By including transparency in coverage in this set of 
requirements that apply to most private coverage, Congress established 
transparency as a key component to PPACA's comprehensive framework for 
regulating private health coverage.\5\
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    \2\ See Jost, T.S. ``Loopholes in the Affordable Care Act: 
Regulatory gaps and border crossing techniques and how to address 
them.'' St. Louis University Journal of Health Law and Policy, 
Washington & Lee Legal Studies Paper No. 2011-16. August 15, 2011 
(explaining that ``[t]he Affordable Care Act was meant to regulate 
health care plans comprehensively'' and providing further details on 
the scope of PPACA). Available at: https://scholarlycommons.law.wlu.edu/wlufac/265/.
    \3\ Patient Protection and Affordable Care Act, Public Law 111-
148, 124 Stat. 119 (2010), section 1001.
    \4\ In addition to these requirements, PPACA's ``Improving 
Coverage'' requirements include, among other things: The prohibition 
on rescissions in section 2712 of the PHS Act; the requirement to 
cover preventive health services without cost sharing requirements 
in section 2713 of the PHS Act; the extension of coverage to 
dependents up to age 26 in section 2714 of the PHS Act; the 
requirement to provide a summary of benefits and coverage in section 
2715 of the PHS Act; quality reporting requirements in section 2717 
of the PHS Act; and appeals process requirements in section in 2719 
of the PHS Act.
    \5\ Transparency was included as an important and transformative 
element in other leading comprehensive health reform proposals. See 
Porter, M. and Teisberg, E. Redefining Health Care. Harvard Business 
School Press. Boston, MA. 2006. (``Perhaps the most fundamental role 
of government in enabling value-based competition is to ensure that 
universal, high-quality information on provider outcomes and prices 
for every medical condition is collected and disseminated. This 
single step will have far-reaching and pervasive effects throughout 
the system . . . .'').
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    On March 27, 2012, HHS issued the Exchange Establishment final rule 
that implemented sections 1311(e)(3)(A) through (C) of PPACA at 45 CFR 
155.1040(a) through (c) and 156.220.\6\ The Exchange Establishment 
final rule created standards for QHP issuers to submit specific 
information related to transparency in coverage. QHPs are required to 
post and make data related to transparency in coverage available to the 
public in plain language and submit this same data to HHS, the 
Exchange, and the relevant state insurance commissioner. In the 
preamble to the Exchange Establishment final rule, HHS noted that 
``health plan standards set forth under the final rules are, for the 
most part, strictly related to QHPs certified to be offered through the 
Exchange and not the entire individual and small group market. Such 
policies for the entire individual and small and large group markets 
have been, and will continue to be, addressed in separate rulemaking 
issued by HHS, and the Departments of Labor and the Treasury.''
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    \6\ 77 FR 18310 (Mar. 27, 2012).
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2. Medical Loss Ratio
    Section 2718(a) of the PHS Act, as added by PPACA, generally 
requires health insurance issuers offering group or individual health 
insurance coverage (including a grandfathered health insurance plan) to 
submit an annual report to the Secretary of HHS that details the 
percentage of premium revenue (after certain adjustments) expended on 
reimbursement for clinical services provided to enrollees under health 
coverage and on activities that improve health care quality. The 
proportion of premium revenue spent on clinical services and quality 
improvement activities is called the MLR. Section 2718(b) of the PHS 
Act requires an issuer to provide annual rebates to enrollees if its 
MLR falls below specified standards (generally 80 percent for the 
individual and small group markets, and 85 percent for the large group 
market). HHS published an interim final rule to implement the MLR 
program in the December 1, 2010 Federal Register (75 FR 74863). A final 
rule was published in the December 7, 2011 Federal Register (76 FR 
76573). The MLR program requirements were amended in final rules 
published in the December 7, 2011 Federal Register (76 FR 76595), the 
May 16, 2012 Federal Register (77 FR 28790), the March 11, 2014 Federal 
Register (79 FR 13743),

[[Page 72160]]

the May 27, 2014 Federal Register (79 FR 30339), the February 27, 2015 
Federal Register (80 FR 10749), the March 8, 2016 Federal Register (81 
FR 12203), the December 22, 2016 Federal Register (81 FR 94183), the 
April 17, 2018 Federal Register (83 FR 16930), the April 25, 2019 
Federal Register (84 FR 17454), and the February 6, 2020 Federal 
Register (85 FR 7088).

B. Benefits of Transparency in Health Coverage and Past Efforts To 
Promote Transparency

    PPACA's transparency in coverage requirements can help ensure the 
accurate and timely disclosure of information appropriate to support an 
efficient and competitive health care market. A well-functioning, 
competitive market depends on information being available to buyers and 
sellers.\7\ As President Trump's ``Executive Order on Improving Price 
and Quality Transparency in American Healthcare to Put Patients First'' 
explains: ``To make fully informed decisions about their health care, 
patients must know the price and quality of a good or service in 
advance.'' Yet, as the Executive order then notes, ``patients often 
lack both access to useful price and quality information and the 
incentives to find low-cost, high-quality care.'' The lack of this 
information is widely understood to be one of the root problems causing 
dysfunction within America's health care system.
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    \7\ Porter, M. and Teisberg, E. Redefining Health Care. Harvard 
Business School Press. Boston, MA. 2006, pg. 54. (``Information is 
fundamental to competition in any well-functioning market. It 
enables buyers to shop for the best value and allows sellers to 
compare themselves to rivals. Without relevant information, doctors 
cannot compare their results to best practice and to other 
providers. And without appropriate information, patient choice has 
little meaning.'').
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    The Departments of Labor, HHS, and the Treasury (Departments) are 
of the view that transparency in health coverage requirements will 
strengthen America's health care system by giving health care 
consumers, researchers, regulators, lawmakers, health innovators, and 
other health care stakeholders the information they need to make, or 
assist others in making informed decisions about health care purchases. 
Health care consumers include various persons and entities that finance 
health care needs through the purchase of insurance. Health care 
consumers also include uninsured persons without health coverage who 
must pay out-of-pocket for health care items and services and uninsured 
persons who may be shopping for health coverage. Employers that sponsor 
health plans for their employees and government programs that provide 
health care services and benefits to consumers are also health care 
consumers.
    By requiring the dissemination of price and benefit information 
directly to consumers and to the public, the transparency in coverage 
requirements will provide the following consumer benefits:

 Enables consumers to evaluate health care options and to make 
cost-conscious decisions;
 strengthens the support consumers receive from stakeholders 
that help protect and engage consumers;
 reduces potential surprises in relation to individual 
consumers' out-of-pocket costs for health care services;
 creates a competitive dynamic that may narrow price dispersion 
for the same items and services in the same health care markets; and
 puts downward pressure on prices which, in turn, potentially 
lowers overall health care costs.

    The goal of the final rules is to deliver these benefits to all 
consumers and health care stakeholders through greater transparency in 
coverage.
    Comments received in response to the proposed rules on transparency 
in coverage (discussed in more detail later in this preamble) have 
strengthened the Departments' view that this price transparency effort 
will equip the public with information to actively and effectively 
participate in the health care system as consumers.\8\ The majority of 
commenters acknowledged the importance of the availability of health 
care pricing information and appropriate tools to assist consumers in 
health care decision-making and managing health care costs. For these 
reasons and those explained in more detail below in this preamble, the 
Departments continue to be of the view that price transparency efforts 
are crucial to providing consumers (individual and institutional) with 
meaningful and actionable pricing information in an effort to contain 
the growth of health care costs.
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    \8\ 84 FR 65464 (Nov. 27, 2019).
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1. Transparency Provides Necessary Information for Consumers To Make 
More Informed Health Care Spending Decisions
    As explained in the report, ``Reforming America's Healthcare System 
Through Choice and Competition,'' consumers have an important role to 
play in controlling costs, but consumers must have meaningful 
information in order to create the market forces necessary to achieve 
lower health care costs.\9\ When consumers seek care, they do not 
typically know whether they could have received the same service from 
another provider at lower prices. Third-party payers negotiate prices 
on the consumer's behalf and reimburse costs directly to health care 
providers, concealing the actual price from the consumer at the point 
of care. After receiving care, consumers typically receive an 
Explanation of Benefits (EOB), which details the price charged by the 
provider, contracted or negotiated rate, and consumer cost sharing. 
Often, only after services are rendered is the cost of care disclosed 
to the consumer.
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    \9\ Azar, A.M., Mnuchin, S.T., and Acosta, A. ``Reforming 
America's Healthcare System Through Choice and Competition.'' United 
States, Department of Health and Human Services. December 3, 2018. 
Available at: https://www.hhs.gov/sites/default/files/Reforming-Americas-Healthcare-System-Through-Choice-and-Competition.pdf.
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    Historically, there has been little to no incentive for some 
consumers to consider price and seek lower-cost care.\10\ Rapidly 
rising health care spending in the past 20 years, however, has led to 
consumers shouldering a greater portion of their health care costs 
through increases in out-of-pocket expenses.\11\
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    \10\ Id.
    \11\ Claxton, G., Levitt, L., Long M. ``Payments for cost 
sharing increasing rapidly over time.'' Peterson-Kaiser Health 
System Tracker. April 2016. Available at: https://www.healthsystemtracker.org/brief/payments-for-cost-sharing-increasing-rapidly-over-time/.
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    Since 1970, per capita out-of-pocket expenditures have nearly 
doubled due to a number of factors.\12\ These factors include increased 
enrollment in high deductible health plans (HDHPs) and accompanying 
health savings accounts (HSAs), and increased plan and issuer reliance 
on payments towards deductibles comprising the proportion of total 
cost-sharing payments.\13\ As explained in the preamble to the proposed 
rules, these shifts in plan design and enrollment are correlated with 
consumers bearing a greater share of their overall health care costs in 
the private health insurance market than in previous years.\14\ From 
2002 to the enactment of PPACA in 2010,

[[Page 72161]]

nationally, the percentage of private sector employees enrolled in a 
health plan with a deductible increased from 47.6 percent to 77.5 
percent and continued to increase to 86.6 percent in 2019.\15\ Average 
family deductibles for private sector employees grew from $958 in 2002 
to $1,975 in 2010, and then to $3,655 in 2019--an 85 percent increase 
since the enactment of PPACA.\16\ These changes represent a substantial 
increase in the amount that consumers must pay for health care before 
insurance begins to cover items or services.\17\ Deductibles made up 52 
percent of cost-sharing spending in 2016, up from 30 percent in 2006, 
while copays dropped from 43 percent to 17 percent of cost-sharing 
payments over the same period.\18\ The gradual shift away from 
copayments, which are predictable to the consumer through their set 
dollar amounts for each covered item or service, to deductibles and 
coinsurance, has increased the need for consumers to know the 
negotiated price in order to plan ahead and budget for out-of-pocket 
costs. Over time, price disclosure can improve consumers' ability to 
better manage costs of utilized health care for a variety of health 
care plans. Increased enrollment in HDHPs and the shift to coinsurance 
across plan and benefit designs means that consumers have a vested 
interest in learning the costs of care prior to paying for items or 
services, as they are responsible for paying out-of-pocket 
expenditures, which are directly dependent on the negotiated or 
contractual price.
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    \12\ ``Out-of-pocket spending.'' Peterson-KFF Health System 
Tracker. May 2020. Available at: https://www.healthsystemtracker.org/indicator/access-affordability/out-of-pocket-spending/.
    \13\ HDHP as defined in section 223(c)(2) of the Code; see also 
Claxton, G., Levitt, L., Long, M. ``Payments for cost sharing 
increasing rapidly over time.'' Peterson-KFF Health System Tracker. 
April 2016. Available at: https://www.healthsystemtracker.org/brief/payments-for-cost-sharing-increasing-rapidly-over-time/.
    \14\ 84 FR 65464, 65465 (Nov. 27, 2019).
    \15\ See ``Medical Expenditure Panel Survey. Insurance Component 
National-Level Summary Tables.'' United States Department for Health 
and Human Services Agency for Healthcare Research and Quality. 
Available at: https://www.meps.ahrq.gov/mepsweb/data_stats/quick_tables_search.jsp?component=2&subcomponent=1.
    \16\ Id.
    \17\ McCarthy-Alfano, M., et al. ``Measuring the burden of 
health care costs for working families.'' Health Affairs. April 2, 
2019. Available at: https://www.healthaffairs.org/do/10.1377/hblog20190327.999531/full/.
    \18\ Claxton, G. et al. ``Increases in cost-sharing payments 
continue to outpace wage growth.'' Peterson-KFF Health System 
Tracker. June 15, 2018. Available at: https://www.healthsystemtracker.org/brief/increases-in-cost-sharing-payments-have-far-outpaced-wage-growth/.
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    These trends in designing health plans have led to consumers 
bearing an increased share of their health care costs. The fact that 
more consumers are bearing greater financial responsibility for the 
cost of their health care provides an opportunity to establish a more 
consumer-directed and consumer-driven health care market. Eighty-eight 
percent of consumers support requirements for providers and issuers to 
disclose prices prior to care.\19\ If consumers have better pricing 
information and can shop for health care items and services more 
efficiently, they can increase competition and demand for lower 
prices.\20\ However, consumers generally have little information 
regarding negotiated rates or out-of-network costs until after services 
are rendered. There is also wide variability in health care prices for 
the same service.\21\ As a result, it can be difficult for consumers to 
estimate potential out-of-pocket costs.
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    \19\ ``Harvard CAPS Harris Poll.'' Harvard University. May 2019. 
Available at: https://harvardharrispoll.com/wp-content/uploads/2019/06/HHP_May19_vF.pdf?utm_source=hs_email&utm_medium=email&_hsenc=p2ANqtz--NgSdTYggGUP4tWyR2IEQ7i8TCg1s3DcHuQyhErIgkX3KFUi3SFgl9OZKm4-JUOOi9tmMQ.
    \20\ Azar, A.M., Mnuchin, S.T., and Acosta, A. ``Reforming 
America's Healthcare System Through Choice and Competition.'' United 
States, Department of Health and Human Services. December 3, 2018. 
Available at: https://www.hhs.gov/sites/default/files/Reforming-Americas-Healthcare-System-Through-Choice-and-Competition.pdf.
    \21\ Cooper, Z., et al. ``The Price Ain't Right? Hospital Prices 
and Health Spending on the Privately Insured.'' The Quarterly 
Journal of Economics, Vol. 134. Issue 1. February 2019. September 4, 
2018. Available at: https://academic.oup.com/qje/article/134/1/51/5090426?searchresult=1.
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2. Transparency Strengthens Stakeholders' Ability To Support Consumers
    Making price transparency information publicly available 
strengthens the work of other health care stakeholders that help 
provide care or promote access to care to consumers, or otherwise aim 
to protect consumers and their interests in the health care system. 
These entities include researchers, regulators, lawmakers, patient and 
consumer advocates, and businesses that provide consumer support tools 
and services. A key aspect of transparency in coverage is to make 
health care pricing information more accessible and useful to consumers 
by making the information available to persons and entities with the 
requisite experience and expertise to assist individual consumers and 
other health care purchasers to make informed health care decisions.
    With information on pricing, these other health care stakeholders 
can better fulfill each of the unique roles they play to improve 
America's health care system for consumers. For instance, with pricing 
information researchers could better assess the cost-effectiveness of 
various treatments; state regulators could better review issuers' 
proposed rate increases; patient advocates could better help guide 
patients through care plans; employers could adopt incentives for 
consumers to choose more cost-effective care; and entrepreneurs could 
develop tools that help doctors better engage with patients.
3. Transparency Reduces the Potential for Surprise Billing
    Making the price of care available to consumers before they receive 
care can reduce the potential for consumers to be surprised by the 
price of a health care item or service when they receive the bill after 
receiving care. However, accessible pricing information holds special 
value for insured consumers.\22\ Surprise billing has become a 
substantial concern for insured consumers, in particular, consumers who 
receive a bill from an out-of-network provider when they thought an in-
network provider was treating them. While price transparency alone is 
not a complete solution to this problem, the disclosure of pricing 
directly to consumers could help mitigate some unexpected health care 
costs. As just noted, making pricing information public can also 
strengthen other health care stakeholders' ability to protect 
consumers. In the case of surprise billing, public information on 
pricing for in-network and out-of-network services could allow 
stakeholders to develop better tools to help patients avoid surprises 
and improve oversight of health insurance issuers, plans, and 
providers.
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    \22\ See Office of the Assistant Secretary for Planning and 
Evaluation, U.S. Department of Health & Human Services. Secretary of 
Health and Human Services' Report on: Addressing Surprise Medical 
Billing, at p. 3. July 2020. (recognizing that HHS regulatory action 
to encourage price transparency by insurers ``can serve as the 
backbone for a more comprehensive surprise billing solution''). 
Available at https://aspe.hhs.gov/system/files/pdf/263871/Surprise-Medical-Billing.pdf.
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4. Transparency Increases Competition and Contains Costs
    Without transparency in pricing, market forces cannot drive 
competition. This lack of competition in many health care markets is 
demonstrated by significant, unexplained variations in prices for 
procedures, even within a single region.\23\ For example, studies of 
price variation within California and nationally suggest that there is 
substantial opportunity for increased transparency to save money by 
shifting patients from high to lower-cost providers.\24\ The 
Departments are of the

[[Page 72162]]

view that consumers will take advantage of increased transparency to 
shop for their health care if price transparency is put into place 
nationwide.\25\ Many empirical studies have investigated the impact of 
price transparency on non-health care markets, with most research 
showing that ``price transparency leads to lower and more uniform 
prices, a view consistent with predictions of standard economic 
theory.'' \26\ Studies suggest that consumers want and will use 
actionable pricing information to shop for more cost-effective 
care.\27\ For example, when automobile prices were presented 
transparently on the internet, inclusive of the dealer invoice price, 
the consumers who did not like the traditional bargaining process were 
able to reduce spending overall by 1.5 percent.\28\ Another study 
demonstrated the public display of life insurance prices for comparison 
led to a 5 percent decrease in the consumer price.\29\ Price 
transparency also reduced price dispersion across other markets, such 
as the airline industry, which saw a reduction in price dispersion from 
18 percent in 1997 narrowing to 0.3-2.2 percent in 2002 for fares 
available at multiple travel websites.\30\ These lessons from other 
markets suggest that more thoroughly implementing price transparency 
across the health care industry could increase competition to provide 
lower costs and limit price variation.\31\
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    \23\ Id.
    \24\ Boynton, A., Robinson, J. ``Appropriate Use of Reference 
Pricing Can Increase Value.'' Health Affairs Blog. July 7, 2015. 
Available at: https://www.healthaffairs.org/do/10.1377/hblog20150707.049155/full/; see also Sinaiko, A., Rosenthal, M. 
``Examining a Health Care Price Transparency Tool: Who Uses it, and 
How They Shop for Care.'' 35 Health Affairs 662. April 2016. 
Available at: https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2015.0746.
    \25\ See Gordon, D., et al. ``Health Care Consumer Shopping 
Behaviors and Sentiment: Qualitative Study.'' Journal of 
Participatory Medicine. Volume 12. No. 2. 2020. Available at: 
https://jopm.jmir.org/2020/2/e13924/ (study demonstrating that 
consumers already engage in ``behaviors related to seeking, 
comparing, or knowing the prices of care'' regardless of the 
presence of price transparency tools).
    \26\ Austin, D.A., and Gravelle, J.G. ``Does Price Transparency 
Improve Market Efficiency? Implications of Empirical Evidence in 
Other Markets for the Health Sector.'' United States Congress 
Congressional Research Service. April 29, 2008. Available at: 
https://crsreports.congress.gov/product/pdf/RL/RL34101; see also 
Grennan, M., Swanson, A. ``Transparency and Negotiated Prices: The 
Value of Information in Hospital-Supplier Bargaining.'' 128 Journal 
of Political Economy. April 2020 (Citing research in consumer goods 
showing that information can help decision making when buyers have 
imperfect information on costs.). Available at: https://www.nber.org/papers/w22039; see also 84 FR 65464, 65466 (Nov. 27, 
2019).
    \27\ Semigran, H.L., et al. ``Patients' Views on Price Shopping 
and Price Transparency.'' The American Journal of Managed Care. June 
26, 2017. Available at: https://www.ajmc.com/view/patients-views-on-price-shopping-and-price-transparency.
    \28\ Zettlemeyer, F., Morton, F.S., and Silva-Risso, J. ``How 
the internet Lowers Prices: Evidence from Matched Survey and 
Automobile Transaction Data.'' Journal of Marketing Research. May 
2006. Available at: https://doi.org/10.1509%2Fjmkr.43.2.168.
    \29\ Brown, J., and Goolsbee, A. ``Does the internet Make 
Markets More Competitive? Evidence from the Life Insurance 
Industry.'' Journal of Political Economy, vol. 110, June 2002, pp. 
481-507.
    \30\ Clemons, E.K., Hann, I., and Hitt, L. ``Price Dispersion 
and Differentiation in Online Travel: An Empirical Investigation,'' 
Management Science, vol. 48, no. 4, 2001, pp. 521-39; see also 
``Occupational Labor Statistics.'' United States Bureau of Labor 
Statistics. Available at: https://www.bls.gov/oes/current/oes_stru.htm.
    \31\ 84 FR 65464, 65466 (Nov. 27, 2019).
---------------------------------------------------------------------------

    Despite the general absence of price transparency in the health 
care sector, there is research showing how price transparency leads to 
lower and more uniform pricing in health care markets. For instance, as 
noted in the preamble to the proposed rule, research shows patients 
saved $7.9 million and issuers saved $36 million on imaging services in 
New Hampshire after the state launched a website publishing health 
prices for most consumers with private health insurance.\32\ One study 
found use of a telephone- and email-based tool to search for health 
care prices reduced the price paid by 10 to 17 percent and reduced the 
prices paid for care on average by 1.6 percent.\33\ Another study of a 
program that provided health plan participants, beneficiaries, or 
enrollees with price and quality information to help select high-value 
imaging services found an increase in the use of lower-cost 
facilities.\34\ This consumer behavior prompted higher-cost facilities 
to lower their prices, which resulted in a 30 percent reduction in the 
price variation between low- and high-cost facilities.\35\ These 
studies, as well the numerous studies highlighted in subsequent 
sections of this rule, offer substantial evidence that price 
transparency in health care markets will result in consumer benefits 
similar to those that result from transparency in other markets.
---------------------------------------------------------------------------

    \32\ Id.
    \33\ Lieber, E. ``Does It Pay to Know Prices in Health Care?'' 
American Economic Journal: Economic Policy. February 2017. Available 
at https://pubs.aeaweb.org/doi/pdfplus/10.1257/pol.20150124.
    \34\ Wu, S.J. et al. ``Price transparency for MRIs increased use 
of less costly providers and triggered provider competition.'' 
Health Affairs. August 2014. Available at: https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2014.0168.
    \35\ Id.
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5. The Final Rules Will Fill Gaps Left by State and Private 
Transparency Efforts
    Currently, the information that consumers need to make informed 
decisions based on the prices of health care services is not readily 
available or is presented in a manner that makes it challenging to 
understand. As noted in the preamble to the proposed rules, the 2011 
Government Accountability Office (GAO) report, ``Health Care Price 
Transparency: Meaningful Price Information is Difficult for Consumers 
to Obtain Prior to Receiving Care,'' found that the lack of 
transparency in health care prices, coupled with the wide pricing 
disparities for particular procedures within the same market, can make 
it difficult for consumers to understand health care prices and to shop 
effectively based on cost.\36\ The report also explored various price 
transparency initiatives, including tools that consumers could use to 
generate price estimates before receiving a health care service. The 
report notes that pricing information displayed by tools varies across 
initiatives, in large part due to limits reported by the initiatives in 
their access or authority to collect certain necessary price data. In 
particular, the report notes the lack of public disclosure of rates 
negotiated between providers and third-party payers. The GAO report, 
therefore, recommended that HHS determine the feasibility of, and the 
next steps for, making estimates of out-of-pocket costs for health care 
services available to consumers.
---------------------------------------------------------------------------

    \36\ 84 FR 65464, 65466-65467 (Nov. 27, 2019); see also GAO-11-
791 at p. 28 (Sep. 2011).
---------------------------------------------------------------------------

    States have been at the forefront of transparency initiatives and 
have adopted a variety of approaches to improve price transparency.\37\ 
More than half of the states have passed legislation establishing price 
transparency websites or mandating that health plans, hospitals, or 
physicians make pricing information available to patients.\38\ For 
example, as of September 2020, thirty one states have enacted laws that 
provide participants, beneficiaries, and enrollees with at least 
partial protection against the practice of ``balance billing.'' \39\ At 
least eighteen states have All-Payer Claims Databases. However, state 
transparency requirements are generally not applicable to self-insured 
group health plans, which cover approximately 58.7

[[Page 72163]]

percent of private-sector workers.\40\ As a result, the data collected 
under state law does not include data from self-insured plans, and a 
significant portion of consumers may not have access to information on 
their plans.
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    \37\ De Brantes, F., et al. ``Price Transparency & Physician 
Quality Report Card 2017.'' Catalyst for Payment Reform. Available 
at: https://www.catalyze.org/product/2017-price-transparency-physician-quality-report-card/.
    \38\ Frakt, A., and Mehrotra, A. ``What Type of Price 
Transparency Do We Need in Health Care?'' Annals of Internal 
Medicine. April 16, 2019. Available at: https://www.acpjournals.org/doi/10.7326/M19.
    \39\ Kona, M. ``State Balance-Billing Protections.'' The 
Commonwealth Fund. September 16, 2020. Available at: https://www.commonwealthfund.org/publications/maps-and-interactives/2020/sep/state-balance-billing-protections.
    \40\ ``Report to Congress: Self-Insured Health Benefit Plans 
2019: Based on Filings through Statistical Year 2016.'' March, 2019. 
Available at: https://www.dol.gov/sites/dolgov/files/EBSA/researchers/statistics/retirement-bulletins/annual-report-on-self-insured-group-health-plans-2019.pdf; see also Fronstin, P. ``Self-
Insured Health Plans: Recent Trends by Firm Size 1996-2018.'' 
Employee Benefit Research Institute. No. 488. August 1, 2019. 
Available at: https://www.ebri.org/docs/default-source/ebri-issue-brief/ebri_ib_488_selfinsur-1aug19.pdf?sfvrsn=bd7e3c2f_6.
---------------------------------------------------------------------------

    In response to state action and consumer demands for more 
information on health care pricing, and to align with increased price 
transparency in other markets, health insurance issuers and self-
insured plans have moved to increase price transparency. For example, 
some plans are using price transparency tools to incentivize employees 
to make cost-conscious decisions when purchasing health care services. 
Most large issuers have comparative cost information, which includes 
rates that plans and issuers have negotiated with in-network providers 
and suppliers.
    However, many existing tools are either insufficient in the amount 
of detail they provide or the level of accuracy available. In order to 
expand price transparency to all consumers, Federal action is therefore 
necessary to establish standards and universal access to this 
information. In preparation for writing the proposed rules, the 
Departments met with over 50 stakeholders including plans, issuers, and 
third-party tool developers. Several stakeholders provided 
demonstrations of their tools to the Departments. The Departments note 
that over 90 percent of plans offer some version of a price comparison 
tool.\41\ However, many of the plans and issuers that the Departments 
met with, who did not have a tool serve large portions of participants, 
beneficiaries, and enrollees. It is therefore the Departments' 
understanding that there are still millions of insured Americans that 
do not have access to any type of health care pricing tool. Also based 
on these demonstrations, the Departments are of the view that many 
price transparency tools on the market only offer wide-range estimates 
or average estimates of pricing that use historical claims data and do 
not always take into account the accumulated amount a participant, 
beneficiary, or enrollee has paid toward their deductible or out-of-
pocket limit (sometimes referred to as an ``accumulator''). The 
Departments are of the view that wide-range estimates are of limited 
value to consumers, given that they may not accurately reflect an 
individual's plan design and benefits, and that ranges should be 
replaced by actual estimated out-of-pocket costs, in order to allow the 
consumer to meaningfully predict costs. In addition, the inclusion of 
negotiated rates in these tools could help show the changes to a 
participant's, beneficiary's, or enrollee's costs if they have a future 
need for the same service, conditioned on the level of fulfillment of 
any cost-sharing responsibilities. This could help the consumer better 
understand the full value of the health care they are considering and 
how the cost may be different in the future when the participant's, 
beneficiary's, or enrollee's accumulator resets in a new plan year. 
Information on quality and results are also important for assessing the 
value of care.\42\ Through this increased availability of information 
and consumer comprehension, transparent pricing can apply pressure on 
providers to demonstrate and improve quality and health care results. 
Providers may likely then be in the position of having to justify their 
costs relative to alternative options.
---------------------------------------------------------------------------

    \41\ ``Study: Health Plans Implement Price Transparency Tools 
for Consumers.'' ACA International. April 2016. Available online at: 
https://www.expressrecovery.com/file/86c228ef-245f-45cb-abd7-a30edbdec1f3.
    \42\ See additional discussion of quality information in section 
II.C.1 of the preamble.
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    The Departments are of the view that existing price transparency 
tools often function in a way that makes them difficult for users to 
navigate. These tools often display information that makes it difficult 
to compare one plan against another, understand the scope of services 
covered and their costs, and interpret the terminology plans and 
issuers use. Consumers may be discouraged by these difficult user 
interfaces and may be less likely to make fully informed decisions with 
their healthcare choices. Research demonstrates that poor or confusing 
user interfaces will lead users to abandon engagement with the hosting 
website.\43\ The Departments are of the view that it is important to 
establish a minimum set of standards regarding what is acceptable so 
that consumers can fully utilize all relevant information. Tools that 
provide consistent information to every consumer across all markets, 
and that base cost estimates on accurate and recent information, will 
be a significant improvement over all or most existing options. 
Accuracy and consistency are intended to give consumers confidence that 
the information presented by these tools will not change significantly 
from the prices they are ultimately charged. Reliability should assure 
consumers that information in these tools accurately reflects plans' 
and issuers' best estimates of consumer out-of-pocket costs. The 
availability of these tools across most private markets will ensure 
broad access for all participants, beneficiaries, or enrollees to the 
intended outcomes and potential benefits of the final rules. The 
Departments anticipate that participants, beneficiaries, and enrollees 
will become accustomed to having access to this standardized 
information, no matter what private market plan or coverage they 
choose, which will make them more comfortable with using this 
information in health care purchasing decisions. The Departments 
further anticipate and encourage plans and issuers to include 
additional functionality and innovation in existing price transparency 
tools, but a baseline is necessary to give participants, beneficiaries, 
and enrollees the confidence that, regardless of the tool they use, 
they can expect the same standard information and functionality.
---------------------------------------------------------------------------

    \43\ Georgiou, M. ``User Experience Is the Most Important Metric 
You Aren't Measuring.'' Entrepreneur. March 1, 2018. Available at: 
https://www.entrepreneur.com/article/309161.
---------------------------------------------------------------------------

C. Stakeholder Feedback and Prior Actions in Support of Transparency

    In the HHS 2020 Notice of Benefit and Payment Parameters (2020 
Payment Notice) proposed rule,\44\ HHS sought input on ways to provide 
consumers with greater transparency regarding their own health care 
data, QHP offerings on the Federally-facilitated Exchanges (FFEs), and 
the cost of health care services.\45\ Additionally, HHS sought comment 
on ways to further implement section 1311(e)(3) of PPACA, as 
implemented by 45 CFR 156.220(d), under which, upon the request of an 
enrollee, a QHP issuer must make available in a timely manner the 
amount of enrollee cost sharing under the enrollee's coverage for a 
specific service furnished by an in-network provider. HHS was 
particularly interested in what types of data would be most useful to 
improving consumers' abilities to make informed health care decisions, 
including decisions related to their coverage specifications and ways 
to

[[Page 72164]]

improve consumer access to information about health care costs.
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    \44\ 84 FR 227 (Jan. 24, 2019).
    \45\ The term ``Exchanges'' means American Health Benefit 
Exchanges established under section 1311 of PPACA. See section 
2791(d)(21) of the PHS Act.
---------------------------------------------------------------------------

    Commenters on the 2020 Payment Notice overwhelmingly supported the 
idea of increased price transparency. Many commenters provided 
suggestions for defining the scope of price transparency requirements, 
such as providing costs for both in-network and out-of-network health 
care, and providing health care cost estimates that include an 
accounting for consumer-specific benefit information, like progress 
toward meeting deductibles and annual limitations on cost sharing, as 
well as remaining visits under visit limits. Commenters expressed 
support for implementing price transparency requirements across all 
private markets and for price transparency efforts to be a part of a 
larger payment reform effort and a provider empowerment and patient 
engagement strategy. Some commenters advised HHS to carefully consider 
how such policies should be implemented, warning against Federal 
duplication of state efforts and requirements that would result in 
plans and issuers passing along increased administrative costs to 
consumers and cautioning that the proprietary and competitive nature of 
payment data should be protected.
    In the summer and fall of 2018, HHS hosted listening sessions 
related to the goal of empowering consumers by ensuring the 
availability of useable pricing information. The listening sessions 
included a wide representation of stakeholders including providers, 
issuers, researchers, and consumer and patient advocacy groups. 
Attendees noted that currently available pricing tools are 
underutilized, in part because consumers are often unaware that they 
exist,\46\ and even when used, the tools sometimes convey inconsistent 
and inaccurate information.
---------------------------------------------------------------------------

    \46\ Miller, S. ``Healthcare Shopping Tools Often Go Unused.'' 
Society for Human Resource Management. May 19, 2016. Available at: 
https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/health-care-shopping.aspx.
---------------------------------------------------------------------------

    Attendees also commented that tool development could be expensive, 
especially for smaller health plans, which tend to invest less in 
technology because of the limited return on investment. Attendees 
further commented that most tools developed to date do not allow for 
comparison shopping. Attendees stated that existing tools usually use 
historical claims data, which results in broad, sometimes regional, 
estimates, rather than accurate and individualized prices. In a 
national study, there was alignment among patients, employers, and 
providers in wanting to know and discuss the cost of care at the point 
of service.\47\ However, attendees noted pricing tools are rarely 
available when and where consumers are likely to make health care 
decisions, for example, during interactions with providers. Thus, 
patients are not able to consider relevant cost issues when discussing 
referral options or the tradeoffs of various treatment options with 
referring providers. With access to patient-specific cost estimates for 
services furnished by particular providers, referring providers and 
their patients could take pricing information into account when 
considering clinically appropriate treatment options. Separately, CMS 
has met with members from several state Departments of Insurance to 
discuss the limits to state authority to require price transparency in 
a meaningful way and the benefits and drawbacks of All Payer Claims 
Databases (APCDs). During these discussions, it became clear that 
APCDs' reliance on historical claims data that is not necessarily 
linked to a specific plan or issuer limits the utility of such 
databases for consumers. These conversations helped clarify the types 
of price transparency information necessary to empower consumers.
---------------------------------------------------------------------------

    \47\ ``Let's Talk About Money.'' University of Utah Health Home. 
Available at: https://uofuhealth.utah.edu/value/lets-talk-about-money.php.
---------------------------------------------------------------------------

    CMS has pursued initiatives in addition to the final rules to 
improve access to the information necessary to empower consumers to 
make more informed decisions about their health care costs, including a 
multi-step effort to implement section 2718(e) of the PHS Act. Section 
2718(e) of the PHS Act requires each hospital operating within the 
United States, for each year, to establish (and update) and make public 
(in accordance with guidelines developed by the Secretary of HHS) a 
list of the hospital's standard charges for items and services provided 
by the hospital, including for diagnosis-related groups established 
under section 1886(d)(4) of the Social Security Act (SSA). In the 
Fiscal Year (FY) 2015 Hospital Inpatient Prospective Payment System and 
Long-Term Care Hospital Prospective Payment System (IPPS/LTCH PPS) 
proposed and final rules, CMS reminded hospitals of their obligation to 
comply with the provisions of section 2718(e) of the PHS Act and 
provided guidelines for its implementation.\48\ At that time, CMS 
required hospitals to either make public a list of their standard 
charges or their policies for allowing the public to view a list of 
those charges in response to an inquiry. In addition, CMS stated that 
it expected hospitals to update the information at least annually, or 
more often as appropriate, to reflect current charges. CMS also 
encouraged hospitals to undertake efforts to engage in consumer-
friendly communication of their charges to enable consumers to compare 
charges for similar services across hospitals and to help them 
understand what their potential financial liability might be for items 
and services they obtain at the hospital.
---------------------------------------------------------------------------

    \48\ 79 FR 27978, 28169 (May 15, 2014) and 79 FR 49854, 50146 
(Aug. 22, 2014), respectively.
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    In the FY 2019 IPPS/LTCH PPS proposed and final rules, CMS again 
reminded hospitals of their obligation to comply with section 2718(e) 
of the PHS Act and announced an update to its guidelines.\49\ The 
updated guidelines, which have been effective since January 1, 2019, 
require hospitals to make available a list of their current standard 
charges (whether in the form of a ``chargemaster'' or another form of 
the hospital's choice) via the internet in a machine-readable format 
and to update this information at least annually, or more often as 
appropriate.
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    \49\ 83 FR 20164, 20548 (May 7, 2018) and 83 FR 41144, 41686 
(Aug. 17, 2018), respectively.
---------------------------------------------------------------------------

    In response to stakeholder feedback and in accordance with 
Executive Order 13877, issued on June 24, 2019,\50\ CMS took another 
important step toward improving health care value and increasing 
competition in the Calendar Year 2020 Hospital Outpatient Policy 
Payment System (OPPS) Policy Changes and Payment Rates and Ambulatory 
Surgical Center Payment System Policy Changes and Payment Rates: Price 
Transparency Requirements for Hospitals to Make Standard Charges Public 
final rule (Hospital Price Transparency final rule) by codifying 
regulatory requirements that implement section 2718(e) of the PHS Act, 
as well as a regulatory scheme under section 2718(b)(3) of the PHS Act 
that enables CMS to enforce those requirements.\51\ The price 
transparency disclosure requirements that CMS finalized in the Hospital 
Price Transparency final rule will be effective on January 1, 2021, and 
they require hospitals to make publicly available, as applicable, their 
gross charges (as found in the hospital's chargemaster), payer-specific 
negotiated charges, discounted cash prices, and de-identified minimum 
and maximum negotiated charges for all items and services they provide 
through a single online machine-readable file that is updated at least 
once annually. Additionally, the Hospital Price

[[Page 72165]]

Transparency final rule requires hospitals to display online in a 
consumer-friendly format, as applicable, the payer-specific negotiated 
charges, discounted cash prices (or, to the extent one does not exist 
for a shoppable service, the undiscounted gross charge) and de-
identified minimum and maximum negotiated charges for as many of the 70 
shoppable services selected by CMS that the hospital provides and as 
many additional hospital-selected shoppable services as are necessary 
for a combined total of at least 300 shoppable services (or if the 
hospital provides fewer than 300 shoppable services, then for as many 
as the hospital provides). The rule defines a shoppable service as a 
service that can be scheduled by a health care consumer in advance and 
further explains that a shoppable service is typically one that is 
routinely provided in non-urgent situations that does not require 
immediate action or attention to the patient, thus allowing patients to 
price shop and schedule such a service at a time that is convenient for 
them.\52\
---------------------------------------------------------------------------

    \50\ 84 FR 30849 (Jun. 27, 2019). The Executive order was issued 
on June 24, 2019 and was published in the Federal Register on June 
27, 2019.
    \51\ 84 FR 65524 (Nov. 27, 2019).
    \52\ 84 FR 65524, 65564 (Nov. 27, 2019).
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    In addition to making pricing information available for items and 
services provided by hospitals, the Administration has also been 
engaged in increasing transparency of prescription drug pricing and 
lowering the costs of prescription drugs. Four Executive orders direct 
CMS and other HHS agencies to develop and issue tools, models, and 
several regulations to increase competition and lower patients' drug 
costs.\53\ The actions directed in these Executive orders supplement 
those CMS has already taken to increase drug-pricing transparency and 
lower drug costs. Through the Drug Spending Dashboard, CMS publishes 
data on Medicare and Medicaid spending for prescription drugs in an 
interactive web-based tool so researchers and consumers can easily sort 
the data to identify trends. Over the past four years, CMS has expanded 
this dashboard to include reporting on payments for prescription drugs 
in their first year on the market and information on the drugs' 
manufacturers.\54\ Through the Part D Senior Savings model, beginning 
January 1, 2021, CMS is testing a change to the Manufacturer Coverage 
Gap Discount Program (the ``discount program'') to allow Part D 
sponsors to offer a Part D benefit design that includes predictable 
copays in the deductible, initial coverage, and coverage gap phases for 
a broad range of insulins included in the Model by offering 
supplemental benefits that apply after manufacturers provide a 
discounted price.\55\
---------------------------------------------------------------------------

    \53\ ``Trump Administration Announces Historic Action to Lower 
Drug Prices for Americans.'' United States Department of Health and 
Human Services. July 24, 2020. Available at: https://www.hhs.gov/about/news/2020/07/24/trump-administration-announces-historic-action-lower-drug-prices-americans.html.
    \54\ ``CMS Releases Enhanced Drug Dashboards Updated with Data 
for 2018.'' Centers for Medicare & Medicaid Services.'' December 19, 
2019. Available at: https://www.cms.gov/newsroom/press-releases/cms-releases-enhanced-drug-dashboards-updated-data-2018; see also ``CMS 
Updates Drug Dashboards with Prescription Drug Pricing and Spending 
Data.'' Centers for Medicare & Medicaid Services. March 14, 2019. 
Available at: https://www.cms.gov/newsroom/press-releases/cms-updates-drug-dashboards-prescription-drug-pricing-and-spending-data.
    \55\ ``Part D Senior Savings Model.'' Centers for Medicare & 
Medicaid Services. Available online at: https://innovation.cms.gov/innovation-models/part-d-savings-model.
---------------------------------------------------------------------------

    CMS issued regulations addressing prescription drug 
transparency,\56\ including a regulation implementing the statutory 
prohibition on pharmacist gag clauses,\57\ helping to ensure patients 
have information on lower cost alternatives or that they can save money 
by paying cash. As part of the Calendar Year (CY) 2018 Medicare 
Physician Fee Schedule, CMS adopted a policy that all FDA-approved Part 
B biosimilars would be assigned their own HCPCS codes. Under this 
revised coding policy, CMS pays for separately payable Part B 
biosimilars based on its own Average Sales Price (ASP) plus 6 percent 
of the ASP of its reference product. This policy change was made to 
promote a stable and robust biosimilars market that drives competition 
and lowers prices.
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    \56\ See 84 FR 23832 (May 23, 2019) (HHS final rule finalizing 
policies that aimed to ``increase transparency of drug pricing and 
drug price increases, giv[e] beneficiaries and prescribers tools to 
help improve adherence, lower prescription drug costs, and minimize 
beneficiary out-of-pocket costs''); see, for example, 42 CFR 423.128 
(requiring additional information in Part D explanations of benefits 
to increase transparency); 42 CFR 423.160 (requiring adoption of e-
prescribing standards to increase transparency).
    \57\ 42 CFR 423.120(a)(8)(iii); see also Verma, S. ``Memorandum 
to All Part D Plan Sponsors: Unacceptable Pharmacy Gag Clauses.'' 
Centers for Medicare & Medicaid Services. May 17, 2018. Available 
at: https://downloads.cms.gov/files/2018-05-17.pdf.
---------------------------------------------------------------------------

    In the CY 2019 Medicare Advantage and Part D final rule, CMS 
adopted a policy to allow for certain low-cost generic drugs to be 
substituted onto plan formularies at any point during the year, so 
beneficiaries immediately benefit and have lower cost sharing.\58\ The 
Modernizing Part D and Medicare Advantage To Lower Drug Prices and 
Reduce Out-of-Pocket Expenses rule \59\ finalized in May 2019 requires 
Part D plans to implement, no later than January 1, 2021, a real-time 
benefit tool that can be integrated into at least one prescriber's 
electronic prescribing or EHR system to provide patient-specific 
formulary and benefit information, including cost sharing.\60\ The rule 
also requires that beginning January 2021, the Explanation of Benefits 
document that Part D enrollees receive each month must include 
information on drug price increases and lower-cost therapeutic 
alternatives. In June 2020, CMS proposed \61\ further policy changes 
that would begin removing barriers to value-based purchasing 
arrangements between drug manufacturers and payers.\62\ Value-based 
payments for prescription drugs has the potential to increase patient 
access to new medicines by holding prescription drug manufacturers 
accountable for outcomes their drug achieves, as well as creating 
alternatives to traditional cost controls that may impede patient 
access.\63\
---------------------------------------------------------------------------

    \58\ ``CMS lowers the cost of prescription drugs for Medicare 
beneficiaries.'' Centers for Medicare & Medicaid Services. April 2, 
2018. Available at: https://www.cms.gov/newsroom/press-releases/cms-lowers-cost-prescription-drugs-medicare-beneficiaries.
    \59\ 84 FR 23832 (May 23, 2019).
    \60\ ``CMS Takes Action to Lower Prescription Drug Prices and 
Increase Transparency.'' Centers for Medicare & Medicaid Services. 
May 16, 2019. Available at: https://www.cms.gov/newsroom/press-releases/cms-takes-action-lower-prescription-drug-prices-and-increase-transparency.
    \61\ ``Establishing Minimum Standards in Medicaid State Drug 
Utilization Review (DUR) and Supporting Value-Based Purchasing (VBP) 
for Drugs Covered in Medicaid, Revising Medicaid Drug Rebate and 
Third Party Liability (TPL) Requirements (CMS 2482-P) Fact Sheet. 
Centers for Medicare & Medicaid Services. June 17, 2020. Available 
at: https://www.cms.gov/newsroom/fact-sheets/establishing-minimum-standards-medicaid-state-drug-utilization-review-dur-and-supporting-value-based.
    \62\ 85 FR 37286 (Jun. 19, 2020).
    \63\ Verma, S. ``CMS's Proposed Rule On Value-Based Purchasing 
For Prescription Drugs: New Tools For Negotiating Price For The Next 
Generation Of Therapies.'' Health Affairs. June 17, 2020. Available 
at: https://www.healthaffairs.org/do/10.1377/hblog20200617.728496/full/.
---------------------------------------------------------------------------

    As part of its effort to incentivize states to pursue innovative 
responses to rising drug prices, CMS approved nine states' (and the 
District of Columbia's) plan amendment proposals to negotiate 
supplemental rebate agreements involving value-based purchasing 
arrangements with drug manufacturers.\64\ These supplemental rebate 
agreements allow states to link payment for prescription drugs to the 
value delivered to patients. Increasing states' flexibility empowers 
them to develop policies that are effective and responsive to local 
conditions and price ``hot spots'' that lower costs, increase

[[Page 72166]]

the predictability of expenses, and improve access for patients.
---------------------------------------------------------------------------

    \64\ ``Medicaid State Plan Amendments.'' Centers for Medicare & 
Medicaid Services. Available online at: https://www.medicaid.gov/medicaid/medicaid-state-plan-amendments/index.html.
---------------------------------------------------------------------------

    As it currently stands, and despite ongoing Federal efforts to 
improve price transparency, there continues to be a lack of 
standardized pricing information to assist consumers in the private 
market when shopping for health care items and services. While there 
are several efforts across states, 33 still do not have comprehensive 
statewide price transparency initiatives,\65\ and as noted earlier, 
sometimes cannot legally require private market plans and issuers to 
provide real-time, out-of-pocket cost estimates to participants, 
beneficiaries, and enrollees.
---------------------------------------------------------------------------

    \65\ LaPointe, J. ``Few States Have Robust Healthcare 
Transparency Laws.'' RevCycle Intelligence. May 11, 2020. Available 
at: https://revcycleintelligence.com/news/few-states-have-robust-healthcare-price-transparency-laws.
---------------------------------------------------------------------------

    The Departments have concluded that the Hospital Price Transparency 
final rule and the other efforts described earlier in this section 
cannot result in enrollees receiving complete price estimates for 
health care items and services because, as the GAO concluded, complete 
price estimates require pricing information from both providers and 
health insurance issuers.\66\ In other words, this rule complements 
existing State, Federal, and private sector price transparency efforts 
by ensuring that pricing information is available from both hospitals 
and payers in both the public and private markets and by expanding 
transparency to pricing information for health care items and services 
provided outside of a hospital setting. As a result of these rules, 
regardless of where a consumer seeks information, be it their plan or 
issuer, or their hospital, they will have guaranteed access to up to 
date and accurate pricing information. In addition, because section 
2718(e) of the PHS Act applies only to items and services provided by 
hospitals the Hospital Price Transparency final rule does not address 
price transparency with respect to items and services provided by other 
health care providers. Accordingly, the Departments have concluded that 
additional price transparency efforts are necessary and required under 
the statute to empower a more price-conscious and responsible health 
care consumer, promote competition in the health care industry, and 
lower the overall rate of growth in health care spending.\67\
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    \66\ GAO-11-791 (Sep. 2011).
    \67\ This view is consistent with the legislative history of 
PPACA. As initially introduced in the Senate on November 19, 2009, 
PPACA included only the requirement on hospitals to disclose 
standard charges included in section 2718. On December 1, 2009, in 
comments supporting the hospital transparency requirement, Sen. Max 
Baucus noted, ``I think the same should also apply to physicians so 
people have a better idea what they will pay or their insurance 
company will pay for these procedures.'' https://www.congress.gov/111/crec/2009/12/08/CREC-2009-12-08.pdf. Sections 2715A and 
1311(e)(3)(C) were then amended to PPACA on December 19 in the final 
managers amendment before passage in the Senate. Available at: 
https://www.congress.gov/111/crec/2009/12/19/CREC-2009-12-19.pdf.
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    The Departments are of the view that the disclosures required under 
the final rules are necessary and appropriate to more fully implement 
section 2715A of the PHS Act and section 1311(e)(3)(C) of PPACA to 
ensure that consumers have ready access to the information they need to 
estimate their potential out-of-pocket costs for health care items and 
services before that service is rendered or that item is delivered. The 
final rules are also intended to empower consumers by incentivizing 
market innovators to help consumers understand how their plan or 
coverage pays for health care and to shop for health care items and 
services based on price, which is a fundamental factor in any 
purchasing decision.

D. Executive Order

    On June 24, 2019, President Trump issued Executive Order 13877, 
``Executive Order on Improving Price and Quality Transparency in 
American Healthcare to Put Patients First.'' Section 3(b) of Executive 
Order 13877 directed the Secretaries of the Departments to issue an 
advance notice of proposed rulemaking (ANPRM), consistent with 
applicable law, soliciting comment on a proposal to require health care 
providers, health insurance issuers, and self-insured group health 
plans to provide or facilitate access to information about expected 
out-of-pocket costs for items or services to patients before they 
receive care. The Departments considered the issue, including by 
consulting with stakeholders, and determined that an NPRM, rather than 
an ANPRM, would allow for more specific and useful feedback from 
commenters, who would be able to respond to specific proposals.

E. Proposed Rules

    In response to Executive Order 13877 and to also implement 
legislative mandates under sections 1311(e)(3) of PPACA and section 
2715A of the PHS Act, the Departments published an NPRM entitled 
``Transparency in Coverage'' on November 27, 2019 (to be codified at 26 
CFR part 54, 29 CFR part 2590, and 45 CFR part 147) (the proposed 
rules) with comments requested by January 14, 2020.\68\ In response to 
requests from stakeholders, the Departments extended the comment period 
15 days, to January 29, 2020.\69\ The proposed rules set forth proposed 
requirements for group health plans and health insurance issuers in the 
individual and group markets to disclose cost-sharing information upon 
request to a participant, beneficiary, or enrollee, including an 
estimate of an individual's cost-sharing liability for covered items or 
services furnished by a particular provider. The Departments proposed 
that plans and issuers be required to make such information available 
on an internet website and, if requested, through non-internet means, 
thereby allowing a participant, beneficiary, or enrollee to obtain an 
estimate and understanding of the individual's out-of-pocket expenses 
and effectively shop for items and services. The proposed rules also 
included proposals to require plans and issuers to disclose in-network 
provider negotiated rates, and historical out-of-network allowed 
amounts through two machine-readable files posted on an internet 
website, thereby allowing the public to have access to health coverage 
information that can be used to understand health care pricing and 
potentially dampen the rise in health care spending.
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    \68\ 84 FR 65464 (Nov. 27, 2019).
    \69\ 85 FR 276 (Jan. 3, 2020).
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    The proposed rules also included requests for information (RFIs) on 
topics closely related to the rulemaking. Due to the design and 
capability differences among the information technology (IT) systems of 
plans and issuers, as well as difficulties consumers experience in 
deciphering information relevant to health care and health insurance, 
the Departments sought comment on additional price transparency 
requirements that could supplement the proposed requirements for 
disclosing cost-sharing information to participants, beneficiaries, or 
enrollees and the proposed requirements for public disclosure of 
negotiated rates and historical allowed amount data for covered items 
and services from out-of-network providers. Specifically, the 
Departments sought comment on whether plans and issuers should be 
required to disclose information necessary to calculate a 
participant's, beneficiary's, or enrollee's cost-sharing liability 
through a publicly-available, standards-based application programming 
interface (API).
    Such a requirement would build off a final rule, ``Medicare and 
Medicaid Programs; Patient Protection and Affordable Care Act; 
Interoperability and Patient Access for Medicare

[[Page 72167]]

Advantage Organization and Medicaid Managed Care Plans, State Medicaid 
Agencies, Children's Health Insurance Program (CHIP) Agencies and Chip 
Managed Care Entities, Issuers of Qualified Health Plans in the 
Federally-Facilitated Exchanges and Health Care Providers'' (CMS 
Interoperability & Patient Access final rule), that CMS published on 
May 1, 2020.\70\ That rule requires Medicare Advantage organizations, 
Medicaid and CHIP Fee-for-Service programs, Medicaid managed care 
plans, CHIP managed care entities, and QHP issuers in the FFEs to 
provide enrollees with access to select data, including claims data, 
through a standards-based API that conforms to the technical standards 
adopted in the Office of the National Coordinator for Health 
Information Technology (ONC) 21st Century Cures Act final rule at 45 
CFR 170.215. The CMS Interoperability & Patient Access final rule 
requires certain entities, such as FFE QHP issuers, to provide certain 
data through a standards-based API. The Departments appreciate the 
comments received in response to the API RFI and will use the comments 
to inform the need for future rulemaking regarding whether plans and 
issuers should be required to disclose information necessary to 
calculate cost-sharing liability through a publicly-available, 
standards-based API. HHS will also monitor the implementation of the 
CMS Interoperability & Patient Access final rule to inform any such 
future rulemaking.
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    \70\ 85 FR 25510 (May 1, 2020).
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    The proposed rule also included RFIs on how provider quality 
measurements and reporting in the private health insurance market may 
be used to complement cost-sharing information for plans and issuers in 
the private health insurance market. The Departments sought comment on 
how existing quality data on health care provider items and services 
could be leveraged to complement the proposals in the proposed rules. 
The primary goal of the proposed and final rules is making information 
available to address the absence of price transparency in the health 
care market; the final rules do not address health care quality at this 
time.
    HHS also proposed to amend its MLR program rules using the 
authority under section 2718(c) of the PHS Act, under which the 
standardized methodologies for calculating measures of the activities 
reported under section 2718(a) of the PHS Act shall be designed to take 
into account the special circumstances of smaller plans, different 
types of plans, and newer plans. Specifically, HHS proposed to 
recognize the special circumstances of a different and newer type of 
plan for purposes of MLR reporting and calculations for plans that 
share savings with consumers who choose lower-cost, higher-value 
providers. HHS proposed to amend 45 CFR 158.221 to add a new paragraph 
(b)(9) to allow any such ``shared savings'' payments made by an issuer 
to an enrollee as a result of the enrollee choosing to obtain health 
care from a lower-cost, higher-value provider, to be factored into an 
issuer's MLR numerator, beginning with the 2020 MLR reporting year (for 
reports filed by July 31, 2021).
    The Departments requested comments on all aspects of the proposed 
rules, as well as a number of specific issues. The Departments received 
over 25,000 comments in response to the proposed rules from a range of 
stakeholders, including plans and issuers, health care providers, 
prescription drug companies, employers, state regulators, health IT 
companies, health care policy organizations and think tanks, and 
individuals. No requests for a public hearing were received. The 
Departments received a number of comments and suggestions that were 
outside the scope of the proposed rules that are not addressed in the 
final rules (for example, regarding hospital prices, other methods for 
reducing health care and prescription drug costs, consumer education 
and provider directories). After careful consideration of the comments, 
the Departments are finalizing the proposed rules with certain 
modifications made in response to comments. These modifications are 
discussed later in this preamble.

F. Legal Authority

    Several commenters questioned the Departments' legal authority 
regarding various aspects of the proposed rules. The Departments are of 
the view that the legal authorities identified earlier in this preamble 
are sufficient to support the final rules.
1. Statutory Authority Under Section 1311(e)(3) of PPACA
    Several commenters contended that section 1311(e)(3)(A)(ix) of 
PPACA does not give the Departments statutory authority to require that 
plans and issuers make the rates they have negotiated with providers 
and out-of-network allowed amounts publicly available. The commenters 
noted that section 1311(e)(3)(A) of PPACA enumerates eight specific 
categories of information subject to the transparency in coverage 
mandate followed by a ninth ``catchall'' category consisting of ``other 
information as determined appropriate by the Secretary.'' \71\ These 
commenters maintained that the Secretary of HHS's authority under 
section 1311(e)(3)(A)(ix) of PPACA is insufficient to support a 
requirement to publicize negotiated rates because they are not 
sufficiently similar to the other categories of information identified 
under section 1311(e)(3)(A) of PPACA.
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    \71\ See section 1311(e)(3)(A)(i) through (viii) of PPACA.
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    The Departments disagree with these comments and are of the view 
that the information required to be disclosed under this rule fits 
squarely within the scope of information that plans and issuers may be 
required to disclose under section 1311(e)(3)(A)(ix) of PPACA and 
section 2715A of the PHS Act. Section 1311(e)(3)(A)(i) to (viii) of 
PPACA outlines specific information and data that must be submitted to 
the Exchange, the Secretary of HHS, the relevant State insurance 
commissioner, and the public on an accurate and timely basis. In 
addition, section 1311(e)(3)(A)(ix) of PPACA requires health plans to 
submit ``other information as determined appropriate by the 
Secretary.'' Under established principles of statutory construction, 
when a general term follows a list of specific terms in a statute, the 
general term is construed to encompass subjects of a similar character 
to the specific terms. The principle of ejusdem generis guides courts 
in evaluating a catch-all at the end of a list. Therefore, when a 
statute allows an implementing agency to exercise its discretion by 
adding additional items to a list, the implementing agency is empowered 
to add additional items as long as those items are of similar character 
to the items enumerated in the statute.\72\ In this case, the statutory 
list includes information and data useful to evaluate the coverage 
offered by plans and issuers with an emphasis on business practices, 
financial stability, and consumer experience. The list also includes 
information useful to regulators and the public in general to evaluate 
plans' and issuers' business practices and activity in the market. 
Given that the list includes some disclosures that are more immediately 
useful to individual consumers and others that are more immediately 
useful to regulators, the catchall provision is reasonably and best 
read as Congress' recognition that the Secretary of HHS (and, 
therefore, the Departments, by virtue of their joint authority under 
section 2715A of the PHS Act) would need broad flexibility to require 
the

[[Page 72168]]

disclosure of information as appropriate to deliver the transparency 
necessary for consumers to understand their coverage options and for 
regulators to hold plans and issuers accountable.
---------------------------------------------------------------------------

    \72\ See Norfolk & Western R. Co. v. Train Dispatchers, 499 U.S. 
117, 128-29 (1991).
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    It is important to note that Congress considered one amendment that 
would have only required public disclosure at least annually of in-
network allowed charges and expected allowed charges for out of network 
without allowing the Secretary discretion to add to the content of the 
required disclosure.\73\ Instead of adopting this prescriptive 
approach, Congress required public disclosure of a broader set of 
information that similarly included payments for out-of-network 
services, as well as providing the Secretary discretion to require 
disclosure of other information. While Congress did not specifically 
include in-network allowed charges in the provision enacted, the 
discretion they provided suggests they understood that the Secretary 
might later find that requiring the disclosure of additional 
information, including information considered by Congress, might be 
useful and appropriate. That Congress considered and rejected a more 
prescriptive approach strongly suggests Congress intended that the 
Secretary have the ability to mandate more particularized disclosures 
in the future, including the disclosure of in-network negotiated 
rates.\74\
---------------------------------------------------------------------------

    \73\ Congressional Record 155: 183 (December 8, 2009) p. S12716. 
Available at: https://www.congress.gov/111/crec/2009/12/08/CREC-2009-12-08-senate.pdf.
    \74\ See, for example, Lehman v. Nakshian, 453 U.S. 156, 167-8 
(1981) (citing a rejected amendment to a Federal statute as evidence 
of Congressional intent).
---------------------------------------------------------------------------

    A plan's or issuer's negotiated rates provide important information 
to help consumers both evaluate their options before buying coverage 
and, after choosing coverage, evaluate how to use their coverage when 
they need care. Those shopping for coverage will benefit from knowing 
how effectively a plan or issuer negotiates rates; for example, by 
comparing the rates one plan or issuer pays a provider for a particular 
item or service that this consumer knows they, or their family, will 
need in the future, which can then allow them to shop and compare which 
plans and issuers offer the most value. Once coverage is obtained, 
knowing negotiated rates upfront will ensure consumers covered under a 
variety of plan designs and coverage options to, in each case, have 
access to the information they need to obtain health care services in 
an efficient, cost-effective manner, when considering available options 
for a shoppable service. As discussed earlier in this preamble, making 
negotiated rates public also strengthens other health care 
stakeholders' ability to support consumers. Because negotiated rates 
provide important information to help people--including consumers, 
regulators and the general public--evaluate the coverage offered by a 
plan or issuer, it clearly falls within the scope of information 
already required under section 1311(e)(3)(A) of PPACA. As discussed in 
more detail later in this section, out-of-network allowed amounts 
likewise provide vital information to help evaluate coverage.
    Out-of-network allowed charges also provide consumers with 
important information. Consumers may opt for out-of-network services 
for numerous reasons, such as the unavailability of an in-network 
provider who can meet certain medical needs, an existing relationship 
with an out-of-network provider, the recommendation of another 
provider, or personal convenience. Disclosure of estimates of out-of-
network allowed amounts is essential to the ability of consumers 
considering out-of-network services to form an estimate of their 
potential liability. Limiting transparency in pricing requirements to 
only providers under contract with a carrier would prevent transparency 
for all such services, contrary to the plain language of the 
statute.\75\ Indeed, the language of the statute (for example, the 
requirement of section 1311(e)(3)(B) of PPACA that the intended 
audience, including individuals with limited English proficiency, can 
readily understand and use because that language is concise, well-
organized, and follows other best practices of plain language writing) 
indicates an intention to assist consumers by enhancing their ability 
to make cost-conscious decisions; this is an essential component of 
establishing and maintaining robust market competition with costs that 
are reasonable and plausibly tethered to standard market discipline. As 
the preamble to the proposed rules observed, there is substantial 
evidence that increased price transparency provides consumers and the 
public at large with the information that is necessary to improve 
market efficiency.\76\ For these reasons, the Departments are of the 
view that requiring disclosure of estimates of out-of-network allowed 
amounts, which reflect out-of-network benefits under a plan, is well 
within both the text and spirit of the statute and its aims to assist 
consumers in selecting providers, evaluating market options, increasing 
competition, and reducing market disparities. The Departments have 
identified these requirements as beneficial to the ongoing efforts of 
employers and regulators to aid consumers, and as consistent with the 
goals of the statute; thus, the Departments reject the assertion of 
commenters that these purposes are beyond the scope of the statute.
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    \75\ Section 1311(e)(3)(A)(vii) of PPACA.
    \76\ 84 FR 65464, 65489, 65495 (Nov. 27, 2019); see also Austin, 
D.A., and Gravelle, J.G. ``Does Price Transparency Improve Market 
Efficiency? Implications of Empirical Evidence in Other Markets for 
the Healthcare Sector.'' United States Congress Congressional 
Research Service. July 24, 2007. Available at: https://fas.org/sgp/crs/secrecy/RL34101.pdf; see also Brown, Z.Y. ``Equilibrium Effects 
of Health Care Price Information.'' 100 Rev. Econ. & Stat. 1 (2018). 
Available at: http://www-personal.umich.edu/~zachb/
zbrown_eqm_effects_price_transparency.pdf; see also Enthoven, A. 
Market Forces and Efficient Health Care Systems. Health Affairs, 
Vol. 23, No. 2. Available at https://www.healthaffairs.org/doi/full/10.1377/hlthaff.23.2.25.
---------------------------------------------------------------------------

    Several commenters asserted that the specific justifications the 
Departments cite as support for mandating the disclosure of negotiated 
rates are unrelated to the purposes authorized by statute. They 
asserted that those purposes--assisting consumers in selecting health 
care providers, assisting consumers in evaluating options in the 
market, increasing competition and reducing disparities in the market, 
assisting employers, and assisting state regulators--have no 
relationship to the statutory purpose of providing transparency in 
coverage for consumers. Moreover, commenters stated that the statute 
does not authorize the use of price transparency mechanisms to affect 
issuer and provider rate negotiations or health care costs generally, 
to assist employers in negotiations, or to aid state regulators in 
their duties. The Departments, however, find ample support in PPACA 
evidencing the relationship between the purposes intended to be served 
by this final rule, the overall purposes of PPACA, and the PPACA's 
price transparency measures, including section 1311(e)(3).
    The purposes underlying the final rule's requirement to disclose 
negotiated rates are directly tied to providing transparency in 
coverage to consumers. The negotiated rate information that the final 
rules require to be disclosed pursuant to the Departments' authority 
under section 1311(e)(3)(A)(ix) of PPACA, and section 2715A of the PHS 
Act, is directly relevant to providing consumers with transparent 
pricing information sufficient to allow them to assess, in advance of 
receiving services, their liability under a health plan or

[[Page 72169]]

health coverage in the numerous instances in the course of any plan 
year in which the negotiated rate will determine all or a portion of a 
consumer's liability. This is important information that helps 
consumers under a wide variety of plan designs and cost-sharing 
arrangements in both choosing and using coverage. The Departments are 
requiring the disclosure of cost information to further the goal of 
price transparency and are doing so under the authority of section 
1311(e)(3) of PPACA.
    Two commenters suggested that the proposal to require the release 
of negotiated rates in machine-readable format is not authorized under 
the statute. The statute mandates that transparency in coverage 
information ``shall be provided in plain language . . . that the 
intended audience, including individuals with limited English 
proficiency, can readily understand and use because it is concise, 
well-organized, and follows best practices of plain writing.'' \77\ 
These commenters contended that machine-readable information is not 
plain language that is accessible or understandable to the typical 
consumer, and is therefore not within the scope of information 
authorized for public disclosure under section 1311(e)(3)(B) of PPACA.
---------------------------------------------------------------------------

    \77\ Section 1311(e)(3)(B) of PPACA.
---------------------------------------------------------------------------

    The Departments disagree with this assertion. Consistent with the 
statute, the final rules require the machine-readable files to include 
a plain language description for each billing code. The proposed 
requirement that two data files be provided in ``machine-readable 
format''--one containing negotiated rates and the other containing out-
of-network allowed amounts--is a purely operational consideration 
intended to ensure that the file data can be imported or read by a 
computer system directly, without altering the data, and without 
reliance on proprietary software.\78\ Under section 1311(e)(3)(B) of 
PPACA, the ``plain language'' requirement concerns information to be 
made available to the public, the ``intended audience,'' per the 
statute. The Departments require the publication of data in machine-
readable files so that the required information may be presented to all 
members of the intended audience in a concise, well-organized manner 
that follows best practices of plain writing relevant to the intended 
audience.
---------------------------------------------------------------------------

    \78\ 84 FR 65464, 65481 (Nov 27. 2019).
---------------------------------------------------------------------------

    The Departments explain elsewhere in the preamble that the intended 
audience for the information required to be published under the final 
rules includes all consumers and purchasers of health care items and 
services, including individual consumers, employers, and government 
health care programs. The intended audience also includes health care 
stakeholders such as researchers, legislators, and regulators, as well 
as application developers who could make the information usable and 
easily understood by laypersons. Accordingly, application developers 
will be able to access the data in a format that is easily used and 
understood using skills common to application developers. This same 
expertise allows such innovators to incorporate large data sets into 
easy-to-use internet-based tools and mobile applications that will 
present information to laypersons in easy-to-understand, plain language 
that is sufficiently concise and well-organized. The Departments are of 
the view that providing the files in machine-readable format is an 
effective and necessary mechanism to ensure that price transparency 
information be made available to all members of the intended audience 
in a consistent, understandable, plain language format, as the statute 
requires.
    One commenter suggested that the disclosures to the public required 
under section 1311(e)(3)(A) of PPACA consist of aggregated data only 
and do not contemplate or allow public disclosure of specific rate and 
price information. The Departments disagree. While it is true that 
several of the data elements listed under section 1311(e)(3)(A) of 
PPACA are general in nature, such as financial disclosures and 
enrollment data, this fact does not compel the conclusion that all 
elements listed must be construed as requiring aggregated information. 
As noted above, the list encompasses information and data useful to the 
evaluation of plans and issuers by all varieties of health care 
consumer, including individuals, employers, and government programs. 
Certain elements provide information specific to the benefits and 
protections a plan or issuer's coverage provides to an individual, 
including claims payment policies and information on enrollee rights 
under the law. In particular, the data element listed at section 
1311(e)(3)(A)(vii) of PPACA encompasses ``information on cost sharing 
and payments with respect to any out-of-network coverage,'' which, by 
its plain terms, does not contemplate general or cumulative 
information.
    The final rules specify the nature of the information that must be 
made available pursuant to sections 1311(e)(3)(A)(vii) and (ix) of 
PPACA, and the manner in which it is to be made available to fully 
implement the goals and purposes of the statute. Section 1311(e)(3)(C) 
of PPACA concerns disclosures to participants, beneficiaries, and 
enrollees receiving services from participating providers only, whereas 
section 1311(e)(3)(A) of PPACA concerns disclosures to the public 
generally and incorporates out-of-network payment information as well. 
Taken together, and as implemented under the final rules, the statute 
and regulatory schemes cover all persons seeking health pricing 
information in a given market, and advance the purposes of enhancing 
competition, reducing price disparities, and ultimately lowering costs 
through transparency in coverage.
    Ultimately, by adding section 2715A of the PHS Act and section 
1311(e)(3) of PPACA through the manager's amendment prior to passing 
PPACA in the Senate, Congress made transparency a key component of the 
PPACA's comprehensive framework for regulating private health coverage 
through Federal law. Notably, in contrast to the amendment rejected by 
Congress discussed earlier in this preamble, the transparency in 
coverage provisions signed into law provide a far more comprehensive 
and expansive approach toward providing transparency. The law covers 
nearly all private health plans, requires disclosure by plans through 
an internet website, requires disclosures to more entities, requires a 
broader set of information disclosures, and provides additional 
discretion to expand information disclosures. By taking this approach, 
Congress recognized both the importance and the complexity of requiring 
transparency. The discretion provided under the statute ensures that 
the Departments can accommodate changes in technology and health care 
markets, as well as build on the information disclosures specifically 
itemized in the statute.
    A commenter also contended that the proposal to require issuers to 
make estimates of out-of-network allowed amounts available through the 
internet-based self-service tool is not authorized by the statute. This 
commenter asserted that section 1311(e)(3)(C) of PPACA only authorizes 
a requirement that payers make available information concerning cost-
sharing obligations with respect to items or services furnished by a 
participating provider, not by out-of-network providers.
    The Departments disagree and are of the view that the statute fully 
supports a requirement that plans and issuers make available 
information concerning cost-sharing obligations with respect to

[[Page 72170]]

items or services furnished by out-of-network providers. The 
information to be made available under section 1311(e)(3) specifically 
includes ``[i]nformation on cost sharing and payments with respect to 
any out-of-network coverage,'' as well as ``[o]ther information as 
determined appropriate by the Secretary.'' \79\ While section 
1311(e)(3)(C) of PPACA focuses primarily on providing information to 
enrollees, section 1311(e)(3)(A) of PPACA authorizes the Departments to 
make certain out-of-network information available to the public, which 
includes participants, beneficiaries, and enrollees. Thus the 
Departments reasonably determined that section 1311(e)(3)(A) and (C), 
together, authorize the requirement that plans and issuers provide cost 
estimates for covered items and services provided by out-of-network 
providers.
---------------------------------------------------------------------------

    \79\ Section 1311(e)(3)(A) of PPACA; see also Section 
1311(e)(3)(A)(vii) and (ix) of PPACA.
---------------------------------------------------------------------------

2. Constitutional Concerns
    Several commenters asserted that requiring issuers to make rates 
they have negotiated with providers available to the public constitutes 
compelled commercial speech in violation of the First Amendment to the 
Constitution, and an unlawful taking of trade secrets without just 
compensation in violation of the Fifth Amendment. Commenters cited 
various reasons for their belief that the requirement in the proposed 
rules to disclose negotiated rates to the public could not survive 
constitutional scrutiny.
    Several commenters contended that the proposed requirement 
constituted compelled commercial speech, and that the rationale the 
Departments articulated to justify the proposed requirement failed to 
meet the legal standard necessary to justify such action. One commenter 
asserted that a standard of constitutional scrutiny higher than that 
relevant to compelled commercial speech applies to the requirement to 
publish negotiated rates because, the commenter contended, the 
disclosure of negotiated rates does not propose a future commercial 
transaction. Some commenters challenged the proposed rules on the basis 
that negotiated rates have little or no relevance or value to consumers 
attempting to ascertain their potential liability for a particular 
service at a given point in time in the future because negotiated rates 
do not reflect the terms of different plan designs or the status of the 
individual consumer at a given point in time in relation to cost-
sharing obligations, in particular any annual deductible.
    Two commenters asserted that the requirement to publicly disclose 
negotiated rates would go well beyond the stated goal of providing 
notice to participants, beneficiaries, and enrollees of cost-sharing 
liability for covered services because it calls for negotiated rates to 
be available to the public generally, not just to enrolled consumers 
inquiring about their coverage. They also claimed that disclosure of 
negotiated rates would be extremely burdensome because fulfilling the 
mandate would require the disclosure of millions, or even billions, of 
data points. One commenter asserted that because the requirement to 
publish negotiated rates would not be useful to consumers in all 
situations, the requirements in the proposed rules were not narrowly 
tailored enough to survive constitutional scrutiny.
    Some commenters also contended that the Departments' other stated 
interests in mandating the publication of negotiated rates, including 
lowering prices, increasing competition, and informing decision-making 
in the market generally, are not authorized under relevant statute; 
therefore, the breadth of these requirements is overly burdensome and 
inclusive of information not necessary to advance the goals of the 
statute. These commenters concluded that, to the extent the mandated 
publication of negotiated rates is calculated to advance those 
purposes, they are not sufficiently tailored to statutory goals to 
survive constitutional scrutiny.
a. First Amendment Compelled Speech
    The Departments disagree that the proposed rules and the final 
rules run afoul of the First Amendment and would not survive 
constitutional scrutiny. As the United States Supreme Court recognized 
in Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626 (1985) and 
recently confirmed in National Institute of Family and Life Advocates 
v. Becerra, 138 S. Ct. 2361, 2372, 2376 (2018) (``NIFLA''), required 
disclosures of factual, uncontroversial information in commercial 
speech are subject to more deferential First Amendment scrutiny. Under 
the approach articulated in Zauderer, courts have upheld required 
disclosures of factual information in the realm of commercial speech 
where the disclosure requirement reasonably relates to a government 
interest and is not unjustified or unduly burdensome such that it would 
chill protected speech. See, e.g., Am. Meat Inst. v. U.S. Dept. of 
Agric., 760 F.3d 18, 27 (D.C. Cir. 2014); Mass. Ass'n of Private Career 
Sch. v. Healey, 159 F. Supp. 3d 173, 201 (D. Mass. 2016).
    The Departments articulated substantial governmental interests in 
proposing these requirements: Assisting consumers of health care 
services in understanding the costs for which they will be liable for 
covered services prior to the delivery of the services; assisting other 
consumers of health care, such as employers and government health 
benefits programs, in evaluating and negotiating coverage options and 
obtaining the most value for health care dollars; and supporting a 
market-driven health care economy that is sustainable. The preamble to 
the proposed rules also explained how the information required to be 
disclosed under the proposed rules is of substantial value to 
consumers, including health plan participants, beneficiaries, and 
enrollees who have and have not satisfied their annual deductible or 
reached their maximum out-of-pocket limit, and that remains true under 
the final rules. For such consumers who have not met their deductibles, 
knowledge of negotiated rates is necessary for estimating their out-of-
pocket costs because these consumers generally will be responsible for 
paying the full negotiated rate for health care items and services 
until they reach their deductible (or the maximum annual limit on cost 
sharing).
    As the Departments noted earlier in the preamble, between the 
enactment of PPACA and 2019, average family deductibles for private 
sector employees increased by 85 percent, up to $3,655 in 2019.\80\ 
Consumers in the private health insurance market are increasingly 
responsible for a greater share of their health care costs through 
higher deductibles and shifts from copayments to coinsurance.\81\ The 
final rules will give health care consumers and stakeholders 
information vital to their roles in creating and supporting a 
sustainable market-driven health care economy.
---------------------------------------------------------------------------

    \80\ See ``Medical Expenditure Panel Survey. Insurance Component 
National-Level Summary Tables.'' United States Department for Health 
and Human Services Agency for Healthcare Research and Quality. 
Available at: https://www.meps.ahrq.gov/mepsweb/data_stats/quick_tables_search.jsp?component=2&subcomponent=1.
    \81\ The preamble to the proposed rules contains a detailed 
discussion regarding increases in deductibles. See 84 FR 65464, 
65465 (Nov. 27, 2019) (citing Ray, M., Copeland, R., Cox, C. 
``Tracking the rise in premium contributions and cost-sharing for 
families with large employer coverage,'' Peterson-Kaiser Health 
System Tracker. August 14, 2019. Available at: https://www.healthsystemtracker.org/brief/tracking-the-rise-in-premium-contributionsand-cost-sharing-for-families-with-large-employercoverage/.).

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[[Page 72171]]

    The final rules also will provide critical information to consumers 
who have satisfied their deductibles or reached their out-of-pocket 
limit. These consumers may wish to base their health care spending 
decisions on underlying prices to avoid excess spending by their issuer 
or employer that could lead to premium increases, increased out-of-
pocket obligations, or lower employer contributions toward employer-
sponsored coverage. Knowing the rates negotiated by other issuers in 
their geographic market will assist consumers during open enrollment, 
as they search for a plan that may lower their out-of-pocket costs in 
the coming year.
    The government also has a substantial interest in assisting other 
health care spenders, such as employers and government benefits 
programs, to make coverage choices that drive value for the public. 
Given the size and scope of the country's health care market and the 
fact that choices made by employers and benefits programs operate at 
scale to direct health care spending, the government can increase the 
value of health care expenditures by ensuring those entities have 
access to accurate information. Providing employers and government 
benefit programs with actionable data may also help drive down total 
health care spending, as issuers compete to offer higher-value 
programs.
    The government's interest in promoting a sustainable health care 
economy driven by market forces is substantial, as reflected in section 
1311(e) of PPACA. As of 2018, U.S. health care spending had reached 
$3.6 trillion, or $11,172 per person and accounted for 17.7 percent of 
the nation's Gross Domestic Product.\82\ Given the scope of the market 
and the earlier-discussed data suggesting that price transparency and 
market forces can drive down health care costs, the government's 
interest in increasing price transparency is substantial.
---------------------------------------------------------------------------

    \82\ ``Historical National Health Expenditure Data.'' Centers 
for Medicare and Medicare Services. Available at: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsHistorical.
---------------------------------------------------------------------------

    Each of the three interests identified above is furthered by the 
final rules. For individuals, the data provided will permit them to 
compare prices for health care items and services and allocate their 
funds accordingly. For benefit plans and employers, the information 
provided will guide decision-making about which coverage options to 
offer, and which providers or third parties, like pharmacy benefit 
managers (PBMs), to contract with. For the health care economy as a 
whole, the Departments are of the view (based on available data) that 
transparency and market forces will drive savings and reduce 
expenditures. Accordingly, the Departments continue to hold the view 
that the final rules serve substantial government interests.
    Furthermore, the requirement to provide these disclosures does not 
unduly burden plan or issuer speech because nothing in the final rules 
would ``drown out [a plans' or issuers'] own message'' or ``effectively 
rule out'' any mode of communication. See NIFLA, 138 S. Ct. at 2378. 
Plans and issuers remain free to communicate with consumers using 
methods and media they have always used or may choose to use in the 
future.
    The Departments further disagree that the final rules would be 
subject to a standard of constitutional scrutiny higher than that 
applied to compelled commercial speech. For First Amendment purposes, 
commercial speech is speech ``related solely to the economic interests 
of the speaker and its audience.'' Cent. Hudson Gas & Electric Corp. v. 
Pub. Serv. Comm'n of N.Y., 447 U.S. 557, 561 (1980). Price information 
concerning the cost of health services is related solely to the 
economic interests of providers and the consumers who seek their 
services. The speech in question here, therefore, is commercial speech.
    Furthermore, the disclosure of negotiated rates is one concerning 
``purely factual and uncontroversial information about the terms [i.e., 
the price] under which services are available.'' See Zauderer, 471 U.S. 
at 651; see also Am. Meat Inst. v. U.S. Dept. of Agric., 760 F.3d 18, 
27 (D.C. Cir. 2014). Therefore, the imposition on commercial speech by 
the final rules need only be ``reasonably related'' to the government's 
stated interest. For the reasons discussed above, the Departments are 
of the view that making available negotiated rates to consumers is 
reasonably related to the government's stated interests in providing 
greater cost information to consumers and benefit plans, as well as 
increasing price transparency in the health care market more broadly. 
While the Departments disagree that the stricter constitutional 
scrutiny under Central Hudson would apply to the final rules for the 
reasons discussed above, the Departments also are of the view that the 
government interests described above are ``substantial,'' and the 
regulations, for the reasons described above, directly advance that 
governmental interest and are not more extensive than necessary to 
serve that interest. None of the alternatives considered by the 
Departments would provide the full panoply of information necessary to 
achieve the identified interests. Specifically, the only way to provide 
information concerning a consumer's personal liability for health care 
services when the negotiated rate is all or any portion of that 
liability is by disclosing those rates.
    The Departments disagree that the rules are excessively burdensome 
and are invalid because they purportedly exceed the statute's goal of 
providing notice of cost-sharing liability. The Departments are of the 
view that, in addition to providing participants, beneficiaries, and 
enrollees with notice of cost-sharing liability, the final rules are 
intended to advance a number of concurrent goals, as described earlier 
in this preamble. These goals are consistent with the full text of 
section 1311(e)(3) of PPACA and section 2715A of the PHS Act. They 
include the overarching goal of facilitating a market-driven heath care 
system by giving consumers of health care services data that will 
enable consumers to make fully informed, cost-conscious decisions when 
choosing health care. These transparency requirements will support the 
creation of a competitive dynamic in health care markets that leads to 
narrower price differentials for the same services, fosters innovation, 
and potentially lowers overall health care costs over time.\83\ These 
goals are consistent with the statutory mandate to promote transparency 
in coverage by making available to the public accurate and timely 
health care information, including cost-sharing information, and other 
information as deemed appropriate by the Departments.
---------------------------------------------------------------------------

    \83\ 84 FR 65465 (Nov. 27, 2019).
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    The Departments also disagree with any notion that, because 
published negotiated rates would not be useful to all consumers in all 
situations, the final rules are not sufficiently tailored to survive 
constitutional scrutiny. Consumers seeking in-network items or services 
must have access to negotiated rate information to calculate out-of-
pocket costs under the majority of health care payment models. These 
negotiated rates determine the price they will be obliged to pay, up to 
the applicable out-of-pocket limit. Thus, disclosing the negotiated 
rate is important to the consumer's ability to reasonably estimate his 
or her personal financial liability in advance of receiving services. 
In particular, and as explained earlier in this preamble, annual 
deductibles for plans and issuers

[[Page 72172]]

now routinely obligate consumers to pay several thousand dollars before 
the plan or issuer pays any benefits. The requirement to disclose 
negotiated rates to consumers is, therefore, crucial to providing 
meaningful transparency in health care markets.
b. Fifth Amendment Taking
    The Departments also disagree that the requirement to disclose 
negotiated rates in the final rules constitutes an unlawful taking 
without just compensation under the Fifth Amendment. As an initial 
matter, the subject of any ``taking'' is a cognizable property 
interest. Commenters asserted that their negotiated rates constitute 
property because they are trade secrets. The Departments disagree. In 
order for a piece of information to qualify as a trade secret, it must 
be the subject of efforts to maintain its secrecy that are reasonable 
under the circumstances. Under most circumstances, if a piece of 
information is disclosed to third parties who have no obligation to 
keep it a secret, it does not qualify for trade secrets protection. 
Negotiated rates for health care items and services are routinely 
disclosed in EOBs provided to participants, beneficiaries, and 
enrollees. Participants, beneficiaries, and enrollees have no 
obligation to keep the information contained in their EOBs secret; some 
patients provide them to journalists or upload them to crowd-sourcing 
websites.\84\ The Departments are of the view that this routine 
disclosure of negotiated rate information is sufficient to defeat any 
asserted trade-secret protection, and, therefore, the issuers have no 
proprietary interest in the negotiated rates that could be the subject 
of a constitutional ``taking.''
---------------------------------------------------------------------------

    \84\ Kliff, S. ``Why I'm Obsessed With Patients' Medical Bills, 
New York Times. August 7, 2020. Available at https://www.nytimes.com/2020/08/07/insider/coronavirus-medical-bills.html; 
see also Cerullo, M. ``As medical costs soar, more Americans turn to 
crowdfunding.'' CBS News. February 21, 2020. Available at: https://www.cbsnews.com/news/health-care-costs-crowdfunding-medical-bills/.
---------------------------------------------------------------------------

    Moreover, plans' and issuers' expectations of confidentiality in 
information provided as a condition of participation in a highly 
regulated industry (for example, health insurance) are substantially 
diminished by the highly regulated nature of the industry. See, e.g., 
Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1007 (1984) (noting that 
expectations are necessarily adjusted in areas that ``ha[ve] long been 
the source of public concern and the subject of government 
regulation''); Me. Educ. Ass'n Benefits Trust v. Cioppa, 695 F.3d 145 
(1st Cir. 2012) (discussing a Maine law requiring health issuers to 
disclose loss information); Franklin Mem'l Hosp. v. Harvey, 575 F.3d 
121, 128 (1st Cir. 2009) (holding that a claimant's investment-backed 
expectations were ``tempered by the fact that it operate[d] in the 
highly regulated hospital industry'').\85\ Plans and issuers are 
already subject to extensive regulation under Federal and state law. As 
noted by the 1st Circuit in Pharmacy Care v. Rowe:
---------------------------------------------------------------------------

    \85\ PBMs serve as intermediaries between pharmacies and health 
benefit plans, including plans covered by ERISA. PBMs contract with 
pharmacies to establish pharmacy networks and contract with health 
benefit plans to provide access to those pharmacy networks. When a 
participant in a health benefit plan fills a drug prescription at a 
network pharmacy, the PBM pays the pharmacy at the rate negotiated 
in the contract between the PBM and the pharmacy (less any copayment 
by the participant), and the health benefit plan then reimburses the 
PBM at the rate negotiated in the contract between the PBM and the 
health benefit plan.

    If [regulated parties] truly assumed that they would be free 
from disclosure requirements . . . this would be more wishful 
thinking than reasonable expectation. Whether or not the law strikes 
the right economic balance between competing producer and consumer 
interests, it is no more a taking than the requirement that public 
corporations disclose private corporate information about financial 
---------------------------------------------------------------------------
prospects to the public through regular SEC filings.

Pharm. Care Mgmt. Ass'n v. Rowe, 429 F.3d 294, 316 (1st Cir. 2005) 
(joint concurring opinion representing the opinion of the court). The 
Court further stated: ``Given the absence of a full-scale taking and 
the presence of a traditional regulatory interest, it is enough to 
defeat the takings claim that no reasonable investment-backed 
expectation is present at all.'' Id. at 315; see also Good v. United 
States, 189 F.3d 1355, 1363 (Fed. Cir. 1999) (``We have previously held 
that the government is entitled to summary judgment on a regulatory 
takings claim where the plaintiffs lacked reasonable, investment-backed 
expectations. . . .'').
    Even if there were some property interest in negotiated rates, the 
Departments are of the view that this regulation is not a taking. The 
Supreme Court ``has identified several factors that should be taken 
into account when determining whether a governmental action has gone 
beyond `regulation' and effects a `taking.' '' Monsanto, 467 U.S. at 
1005. Among those factors are ``the character of the governmental 
action, its economic impact, and its interference with reasonable 
investment-backed expectations.'' Id. (citing PruneYard Shopping Ctr. 
v. Robins, 447 U.S. 74, 83 (1980)); see also Kaiser Aetna v. United 
States, 444 U.S. 164, 175 (1979); Penn Cent. Transp. Co. v. City of 
N.Y., 438 U.S. 104, 124 (1978).
    In requiring disclosure under the final rules, the government does 
not do so with the intention that the information is primarily and 
explicitly for the government's own use, or that any such potential 
impact is the purpose for requiring the disclosure. Instead, the final 
rules are intended to, and will, enable consumers to access information 
needed to make informed decisions on health care services. Under Penn 
Central, ``[a] `taking' may more readily be found when the interference 
with property can be characterized as a physical invasion by government 
than when interference arises from some public program adjusting the 
benefits and burdens of economic life to promote the common good.'' 
Penn Central, 438 U.S. at 124 (citation omitted). The final rules 
clearly fall on the other end of the spectrum, arising from statutory 
provisions, section 1311(e)(3) of PPACA and section 2175A of the PHS 
Act, that ``adjust[t] the benefits and burdens of economic life to 
promote the common good.'' Connolly v. Pension Benefit Guar. Corp., 475 
U.S. 211, 212 (1986).
3. Protections for Proprietary, Confidential Business Information, and 
Trade Secrets
    Several commenters objected to the proposed rules on grounds that 
the requirement that issuers make public negotiated rates with 
providers would require the disclosure of allegedly confidential, 
proprietary business information, and trade secrets that are expressly 
protected from disclosure by a variety of Federal and state laws, and 
the statute does not in any way purport to abrogate those protections. 
Several commenters pointed to the Defend Trade Secrets Act (DTSA), 
which protects the property rights of trade secret holders,\86\ and the 
Freedom of Information Act (FOIA),\87\ which protects confidential, 
proprietary business information, and trade secrets from public 
disclosure, as examples of Congress' intent that such information be 
protected.
---------------------------------------------------------------------------

    \86\ 18 U.S.C. 1836(b).
    \87\ 5 U.S.C. 552.
---------------------------------------------------------------------------

    The Departments disagree. As discussed above, the Departments are 
of the view that the routine disclosure of negotiated rate information 
to third parties via EOBs means that the rate information is not a 
trade secret, and the DTSA, therefore, does not apply. Even if it did, 
there can be no meaningful sense in which the disclosure of this 
information pursuant to the final rules would constitute a 
misappropriation by

[[Page 72173]]

improper means prohibited by the DTSA. The disclosures in question 
would be made pursuant to a regulatory mandate authorized by law, to 
effectuate policy priorities enacted by Congress: Namely, transparency 
in health care. These disclosures cannot reasonably be construed as 
``theft, bribery, or misrepresentation.'' \88\
---------------------------------------------------------------------------

    \88\ 18 U.S.C. 1839(5)-(6).
---------------------------------------------------------------------------

    The disclosures required under the final rules would also not 
constitute a breach or inducement of a breach of a duty to maintain 
secrecy, as the final rules apply prospectively in a regulatory 
environment in which all parties to provider agreements, and all 
affected plans and issuers, are being placed on notice and should be 
aware in advance of the requirements of the final rules. All parties to 
these contracts are therefore positioned to modify contractual 
arrangements, or similar policies, practices, or expectations relating 
to privacy or trade secrets to conform to the final rules. Otherwise, 
the final rules will supersede these arrangements to the extent 
necessary to implement these rules.
    FOIA is also not relevant to the disclosure that would be required 
by the final rules.\89\ FOIA is a public information law that applies 
to Federal agencies, and generally enables the public to obtain records 
in possession of an agency.\90\ Under the final rules, by contrast, 
negotiated rate information and out-of-network allowed amount 
information would be made available for the express purpose of making 
the information broadly available to the public, consistent with the 
authority Congress vested in the Departments. FOIA does not apply to 
disclosures by private entities such as the plans and issuers that 
would be subject to the disclosure requirements in the final rules. The 
exemptions found in the FOIA statute apply to disclosures by the 
government; that a piece of information might be subject to a FOIA 
exemption does not mean it is entitled to a heightened protection from 
disclosure when held by a private party.
---------------------------------------------------------------------------

    \89\ 5 U.S.C. 552.
    \90\ 5 U.S.C. 552(b)(4).
---------------------------------------------------------------------------

    Neither does FOIA apply to information maintained by private 
entities and not by an agency or government contractor, as that 
information would not constitute an agency record. To be an agency 
record subject to FOIA, an agency must have created or obtained the 
materials and must be in control of the materials. U.S. Dep't of 
Justice v. Tax Analysts, 492 U.S. 136, 145 (1989). Regardless of 
whether the negotiated rates and allowed amounts would constitute trade 
secrets or commercial information under FOIA, a requirement that 
private entities make certain information public does not implicate 
FOIA.
    One commenter contended that the proposed disclosure of negotiated 
rates does not concern trade secrets, and is therefore not prohibited 
for that reason. The commenter asserted that the proposed disclosures 
concern end prices, which are comparable to the ``sticker price'' of a 
medical service or device. The commenter stated that those prices are 
not themselves trade secrets, which the commenter contended consist of 
negotiating tactics which the proposed rules would not require issuers 
to make available to the public. As indicated above in relation to the 
DTSA, the Departments agree that the final rules do not implicate trade 
secrets.
    In support of the proposition that Congress could not have intended 
to undermine existing protections for confidential or proprietary 
business information and trade secrets when it enacted section 
1311(e)(3) of PPACA, one commenter noted that elsewhere in PPACA, where 
Congress mandated pricing-related disclosures, it included language or 
arrangements that protected individual negotiated rates and pricing 
information from disclosure. A provision relating to the disclosure of 
drug cost information mandates release of only aggregated information 
and includes a specific designation of the information as confidential 
and protected from publication except in specific formats and for 
limited purposes that protect the identity of the parties to particular 
pricing arrangements.\91\ Another provision mandates that hospitals 
make public a list of standard charges for items and services, not 
negotiated rates, on an annual basis only.\92\ Both of these 
provisions, the commenter suggested, indicate Congressional intent to 
protect proprietary business information that is contrary to the 
requirements of the proposed rule.
---------------------------------------------------------------------------

    \91\ 42 U.S.C. 1320b-23(c).
    \92\ 42 U.S.C. 300gg(18)(e).
---------------------------------------------------------------------------

    The Departments are aware that Congress included provisions 
preventing or limiting disclosures of health care information in other 
sections of PPACA but note that Congress did not include such 
provisions in section 1311(e)(3)(A) of PPACA, indicating no intention 
that such restrictions apply in this context.\93\
---------------------------------------------------------------------------

    \93\ See, for example, Keene Corp. v. United States, 508 U.S. 
200, 208 (1993) (``[W]here Congress includes particular language in 
one section of a statute but omits it in another . . . it is 
generally presumed that Congress acts intentionally and purposely in 
the disparate inclusion or exclusion.'').
---------------------------------------------------------------------------

    Several commenters also pointed to the Sherman Antitrust Act, and 
specific applications of antitrust principles relating to the 
disclosure of trade secrets, including negotiated rates between issuers 
and providers in the health care context. They contend that Congress 
could not have intended to indirectly undermine these long-standing 
standards and policies when it enacted section 1311(e)(3) of PPACA. 
Several commenters also cited interpretive communications and similar 
guidance from the Federal Trade Commission (FTC) and the Antitrust 
Division of the Department of Justice for the proposition that public 
disclosure of negotiated prices can have anticompetitive effects and 
harm consumers, contrary to long standing principles of antitrust law. 
One commenter recommended that any plan to make public privately 
negotiated rates should include requirements to aggregate information 
to ensure that arrangements of specific market participants remain 
confidential, and that a time lag also should be applied to any 
released data to ensure current information is not compromised.
    The Departments disagree with the notion that the final rules will 
lead to anticompetitive behavior by plans, issuers, and providers. The 
Sherman Antitrust Act prohibits any contract, combination, or 
conspiracy in restraint of trade or commerce.\94\ Specifically, the law 
prohibits any ``person'' from entering into any such contract, trust, 
or similar arrangement.\95\ ``The primary purpose of the antitrust laws 
is to protect interbrand competition.'' State Oil Co. v. Khan, 522 U.S. 
3, 15 (1997) (citing Bus. Elec. Corp. v. Sharp Elec. Corp., 485 U.S. 
717, 726 (1988)). The Departments are not of the view that publication 
of plans' and issuers' negotiated rates with providers is likely to 
spur plans and issuers (``persons'') to violate the law by colluding to 
fix their prices in a manner that restrains trade. Rather, while the 
publication of price information sometimes facilitates tacit collusion, 
based on public comments and the many empirical studies that have 
investigated the impact of price transparency on other, non-health care 
markets, the Departments are of the

[[Page 72174]]

view that transparency of negotiated rates will likely motivate plans, 
issuers, and providers to reassess the competitiveness of their prices 
in order to continue to successfully compete with lower premiums, 
deductibles, and other cost-sharing responsibilities, and lower priced 
health care items and services. As stated in the preamble of the 
Hospital Price Transparency Final Rule, many empirical studies have 
investigated the impact of price transparency on markets, with most 
research, consistent with predictions of standard economic theory, 
showing that price transparency leads to lower and more uniform 
prices.\96\ Traditional economic analysis suggests that if consumers 
were to have better pricing information for health care services, 
providers would face pressure to lower prices and provide better 
quality care. Falling prices may, in turn, expand consumers' access to 
health care.\97\
---------------------------------------------------------------------------

    \94\ 15 U.S.C. 1.
    \95\ Id. ``Person'' or ``persons'' are defined at 15 U.S.C. 
12(a) (``[P]erson'' or ``persons'' wherever used in this Act shall 
be deemed to include corporations and associations existing under or 
authorized by the laws of either the United States, the laws of any 
of the Territories, the laws of any State, or the laws of any 
foreign country'').
    \96\ 84 FR 65464, 65524 (Nov. 27, 2019).
    \97\ Austin, A. D., and Gravelle, J. G. ``Congressional Research 
Service Report for Congress: Does Price Transparency Improve Market 
Efficiency? Implications of Empirical Evidence in Other Markets for 
the Healthcare Sector''. April 29, 2008. Available at: https://crsreports.congress.gov/product/pdf/RL/RL34101.
---------------------------------------------------------------------------

    By disclosing negotiated rates, the Departments are of the view 
that the public (including patients, employers, clinicians, and other 
third parties) will have the information necessary to make more 
informed decisions about their care. The Departments expect that the 
impact of more expansive transparency in pricing information will 
increase market competition and may ultimately drive down the cost of 
health care services, making care more affordable for all consumers.
    Although the Departments appreciate that regulated entities could 
seek to engage in unlawful behavior in restraint of trade, antitrust 
law does not proscribe or limit action by the Federal Government to 
address chronic issues in the nation's health care markets. Such 
actions include new, innovative measures that, based on evidence and 
research, are likely to improve competition and lower costs to 
consumers. The Departments also are of the view that the statute and 
the final rules do not constitute an abrogation of antitrust law. 
Nothing under the final rules creates, compels, or endorses agreements 
or conspiracies between or among persons to form illegal arrangements 
or trusts in restraint of trade or commerce. To the contrary, antitrust 
law enforcement remains an important tool to protect these markets from 
anticompetitive behavior.
    The Departments are of the view that the disclosure of negotiated 
rates would serve a greater public interest and that ``concealing 
negotiated price information serves little purpose other than 
protecting dominant providers' ability to charge above-market prices. . 
. .'' \98\ For example, in Maine, one state official indicated that 
``to date, there is no evidence that the release of [Maine Health Data 
Organization] claims data has resulted in an anticompetitive market. 
Similarly, disclosure of claims data in New Hampshire has resulted 
increased competition and reduced prices for health care.\99\
---------------------------------------------------------------------------

    \98\ Catalyst for Payment Reform. ``Report Card on State Price 
Transparency Laws.'' July 2015. Available at: https://www.catalyze.org/wp-content/uploads/woocommerce_uploads/2017/04/2015-Report-Card-on-State-Price-Transparency-Laws.pdf.
    \99\ Brown Z.Y. ``Equilibrium Effects of Health Care Price 
Information.'' 101 Rev. of Econ. & Stat. 699 (2019). Available at: 
http://www-personal.umich.edu/~zachb/
zbrown_eqm_effects_price_transparency.pdf.
---------------------------------------------------------------------------

    For the reasons set forth in this preamble, the Departments are of 
the view that the final rules will enhance competition, improve 
markets, and benefit all consumers of health care, including 
individuals, employers, and government health care programs. Under the 
final rules, disclosure of the negotiated rate is critical to the 
ability of consumers, including those who have not met their annual 
deductible obligation, to be able to reasonably estimate in advance 
their personal liability for covered services from participating 
providers. It is also critical in estimating coinsurance liabilities 
that are calculated as a percentage of provider charges. In addition, 
the Departments are of the view that accessible pricing information 
improves market efficiency.\100\
---------------------------------------------------------------------------

    \100\ Austin, D.A., and Gravelle, J.G. ``CRS Report for 
Congress: Does Price Transparency Improve Market Efficiency? 
Implications of Empirical Evidence in Other Markets for the 
Healthcare Sector.'' July 24, 2007. Available at: https://fas.org/sgp/crs/secrecy/RL34101.pdf.
---------------------------------------------------------------------------

4. Administrative Procedure Act (APA) and Arbitrary and Capricious 
Agency Action
    Some commenters asserted that the proposed rules were arbitrary and 
capricious and thus violate the APA. Two commenters contended that the 
Departments' rationale is entirely speculative. They also contended 
that the Departments have not quantified in a reliable way the costs or 
anticipated benefits of the proposed rules, examined relevant data, or 
articulated a satisfactory explanation for the proposed rules. One 
commenter held the opposite position and asserted that the proposed 
rules were fully consonant with APA requirements. The commenter 
believed the Departments are implementing PPACA appropriately, and that 
the interpretation of the authorities underlying the proposed rules was 
reasonable and rationally explained by the Departments.
    The Departments are also of the view that the final rules are 
consistent with the APA. Section 1311(e)(3) of PPACA and section 2715A 
of the PHS Act are designed to assist consumers by enhancing their 
ability to make cost-conscious decisions, which is essential to 
establish and maintain the level of market competition necessary to 
ensure that health care costs are rational, reasonable, and governed by 
standard market discipline. As the preamble to the proposed rules 
observed, there is substantial evidence that increased price 
transparency improves market efficiency.\101\ For these reasons, it is 
within the scope of the statute to assist consumers with selecting 
providers, evaluating market options, increasing competition, and 
reducing market disparities. The carefully targeted information is 
essential to the goals of price transparency, and there is no other 
means of making cost-sharing liability information available to 
consumers whose personal liability is determined in whole or in part by 
reference to negotiated rates or allowed amounts. The Departments 
further hold the view that the Departments have made reasonable efforts 
to quantify all aspects of the final rules, and their potential 
effects, for which data is available. The Departments also note that 
efforts have been made to qualitatively address those areas where the 
Departments are unable to adequately derive quantitative assessments. 
Responses to additional comments are discussed later in the Regulatory 
Impact Analysis (RIA) and Regulatory Alternatives Considered sections 
of this preamble.
---------------------------------------------------------------------------

    \101\ 84 FR 65464, 65489; 65495 (Nov. 27, 2019); see also 
Austin, A.D., and Gravelle, J.G. ``Congressional Research Service 
Report to Congress: Does Price Transparency Improve Market 
Efficiency? Implications of Empirical Evidence in Other Markets for 
the Healthcare Sector.'' July 24, 2007. Available at: https://fas.org/sgp/crs/secrecy/RL34101.pdf; see also Brown, Z.Y. 
``Equilibrium Effects of Health Care Price Information.'' 100 Rev. 
Econ. & Stat. 1. Available at: http://www-personal.umich.edu/~zachb/
zbrown_eqm_effects_price_transparency.pdf; see also Enthoven, A. 
``Market Forces and Efficient Health Care Systems.'' Health Affairs, 
Vol. 23, No. 2. Available at https://www.healthaffairs.org/doi/full/10.1377/hlthaff.23.2.25.
---------------------------------------------------------------------------

    This preamble (as well as the preamble to the proposed rules) cites 
substantial research indicating that increased price transparency 
increases competition and lowers costs, leads to

[[Page 72175]]

more uniform pricing within markets, and increases overall market 
efficiency.\102\ This preamble also cites an abundance of evidence 
indicating that industry and other stakeholders believe that increased 
price transparency will enhance competition and benefit consumers. As 
stated earlier in this preamble in relation to comments regarding the 
First Amendment, the information the final rules require to be 
disclosed is clearly identified and has a direct nexus to the 
government's legitimate and substantial interest in ensuring that 
consumers have sufficient information to calculate out of pocket costs 
for health care items and services and ultimately assess whether the 
payment terms of plans and coverages are fair, reasonable, or 
advantageous to the consumer. Furthermore, in the Impact Estimates of 
the Transparency in Coverage Provisions and Accounting Table section 
later in this preamble, the Departments identify ranges of relevant 
factors and categories of information that the Departments have 
attempted to quantify, as well as those factors and categories that the 
Departments cannot quantify at this time. Nevertheless, the Departments 
are of the view that those determinations are reasonable and 
sufficiently thorough, and that the Departments' expectations regarding 
the impacts of the final rules are not speculative.
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    \102\ 84 FR 65464, 65466-67 (Nov. 27, 2019).
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5. Other Legal Concerns
    Several commenters asserted that requiring issuers to make 
negotiated prices public could violate various state laws, principles 
of common law, and tort laws concerned with the protection of trade 
secrets and proprietary business information. Several commenters 
specifically stated that the proposal would violate the Uniform Trade 
Secrets Act (UTSA) \103\ as adopted by several states.
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    \103\ The Uniform Trade Secrets Act is a model statute that a 
majority of states have adopted in some form. The UTSA is 
promulgated by the Uniform Law Commission. See generally, Uniform 
Trade Secrets Act with 1985 Amendments, Nat'l Conference of 
Commissioners on Uniform State Laws, August 1985. UTSA has been 
adopted in some form by 48 states. New York and North Carolina are 
the exceptions. See ``Trade Secrets Act.'' Uniform Laws Commission. 
Available at: https://www.uniformlaws.org/committees/community-home?CommunityKey=3a2538fb-e030-4e2d-a9e2-90373dc05792.
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    The Departments understand these concerns and appreciate that 
States have passed laws and regulations that may address the same or 
similar information the final rules require to be publicly disclosed, 
or disclosed to participants, beneficiaries, or enrollees. The final 
rules will preempt these laws, to the extent they conflict with Federal 
law and would prevent application of Federal requirements, as required 
under section 1321(d) of PPACA and section 2724(a) of the PHS Act. The 
Departments discuss this issue in more detail later in this preamble in 
the context of addressing federalism considerations.
    Moreover, the Departments are also of the view that negotiated 
rates do not constitute trade secrets as defined under the UTSA and 
under principles of tort law. A trade secret under the UTSA is 
``information, including a formula, pattern, compilation, program, 
device, method, technique, or process'' that ``derives independent 
economic value. . . from not being generally known [or] readily 
ascertainable by proper means by . . . other persons who can obtain 
economic value from its disclosure [and] is the subject of efforts to . 
. . maintain its secrecy.'' \104\ Critically, and as discussed earlier, 
negotiated rates are routinely disclosed to beneficiaries in EOBs.
---------------------------------------------------------------------------

    \104\ See Uniform Trade Secrets Act with 1985 Amendments, Nat'l 
Conference of Commissioners on Uniform State Laws, August, 1985; 
Restatement (First) of Torts section 757 (1939).
---------------------------------------------------------------------------

    To the extent the final rules require disclosure of trade secrets, 
the activity that supports a cause of action under tort law includes 
obtaining the information by improper means or a breach of 
confidence.\105\ No such scenario is implicated where the disclosure is 
made pursuant to a regulatory mandate authorized by statute. In this 
context, the disclosure is a legal obligation, and so the disclosure is 
by definition proper and made in the absence of any duty of confidence.
---------------------------------------------------------------------------

    \105\ Restatement (First) of Torts section 757 (1939) (``GENERAL 
PRINCIPLE. One who discloses or uses another's trade secret, without 
a privilege to do so, is liable to the other if (a) he discovered 
the secret by improper means, or (b) his disclosure or use 
constitutes a breach of confidence reposed in him by the other in 
disclosing the secret to him, or (c) he learned the secret from a 
third person with notice of the facts that it was a secret and that 
the third person discovered it by improper means or that the third 
person's disclosure of it was otherwise a breach of his duty to the 
other, or (d) he learned the secret with notice of the facts that it 
was a secret and that its disclosure was made to him by mistake.'').
---------------------------------------------------------------------------

    Finally, even if negotiated rates could constitute trade secrets 
under a state's law, state law cannot invalidate the authority Congress 
granted to the Departments under section 1311(e)(3) of PPACA to require 
disclosure of negotiated rates and other information that the 
Departments determine appropriate to create a level of transparency in 
coverage sufficient to address chronic issues in American health care 
markets, including rising health care prices.
    Several commenters asserted that making negotiated rates public 
would violate contractual arrangements between virtually all issuers 
and providers, in particular contractual provisions that prohibit 
disclosure of negotiated rates. One commenter noted that this would, at 
a minimum, require a considerable effort to amend many existing 
contracts.
    The Departments understand that changes in applicable laws and 
regulations may necessitate changes to certain business and contractual 
relationships over time. The Departments are of the view, however, that 
the final rules are necessary to advance the interests of consumers and 
to fulfill the goals of the relevant statutes. The Departments also 
anticipate that in most cases, affected contracts include clauses that 
specifically anticipate the possibility of future changes to applicable 
law or regulations. Additionally, even if a contract between a provider 
and a payer includes a provision prohibiting the public disclosure of 
its terms, it is the Departments' understanding that such contracts 
typically include exceptions if a particular disclosure is required by 
Federal law. Finally, as the Supreme Court has found, ``[c]ontracts, 
however express, cannot fetter the constitutional authority of 
Congress. Contracts may create rights of property, but when contracts 
deal with a subject matter which lies within the control of Congress, 
they have a congenital infirmity. Parties cannot remove their 
transactions from the reach of dominant constitutional power by making 
contracts about them.'' Norman v. Balt. & Ohio R.R. Co., 294 U.S. 240, 
307-08 (1935) (``If the regulatory statute is otherwise within the 
powers of Congress . . . its application may not be defeated by private 
contractual provisions.''); see also Connolly, 475 U.S. at 224.
    Several commenters contended that the proposed rules would be 
inconsistent with certain Executive orders. One commenter contended 
that Executive Order 13877, which the Departments cited as the impetus 
for the proposed rules, directs the agencies to ``require . . . health 
insurance issuers . . . to provide or facilitate access to information 
about expected out-of-pocket costs for items or services to patients 
before they receive care.'' The commenter asserted that this directive 
does not rationally encompass a requirement that issuers make public 
all negotiated rates and allowed amounts.

[[Page 72176]]

The commenter also asserted that the proposed rules are incompatible 
with section 3(b) of Executive Order 13877, which provides that any 
rulemaking be ``consistent with applicable law,'' in that the proposed 
rules run contrary to antitrust law as well as prohibitions against 
disclosing trade secrets.
    The Departments disagree with these comments. First, Executive 
Order 13877 clearly states that it is ``not intended to, and does not, 
create any right or benefit, substantive or procedural, enforceable at 
law or in equity by any party against the United States, its 
departments, agencies, or entities, its officers, employees, or agents, 
or any other person.'' Executive Order 13877, Sec. 8(c). Thus, an 
Executive order cannot form the basis of a challenge to a rulemaking. 
Second, for all the reasons detailed earlier in this preamble, the 
Departments are of the view that the final rules are necessary and 
appropriate measures that are sufficiently narrowly tailored to meet 
the stated goals of the Executive order. Making public the negotiated 
rates and out-of-network allowed amounts is essential for consumers to 
obtain useful information about out-of-pocket costs they are likely to 
incur before receiving services. Due to the prevalence of high 
deductibles throughout markets nationwide, this information will be 
crucial for a significant cohort of persons enrolled in health plans to 
be able to anticipate costs in advance of each plan year. For the 
public, access to information concerning allowed amounts is essential 
to obtain reliable advance estimates of personal liability to 
facilitate cost-conscious choices that enhance competition and lower 
overall costs. Finally, as described later in this preamble, the 
Departments considered many alternatives to the proposed and final 
rules. The Departments are of the view that the final rules are a 
straightforward implementation of the mandate of section 1311(e)(3) of 
PPACA, and that the choices taken in particular instances are well 
calculated to effectively and fully implement the goals of the 
authorizing statutes. Moreover, the regulations provide tools and 
information to consumers that are critical to their ability to access 
meaningful price information, including the personal liability 
associated with a substantial portion of health care services. This 
directly facilitates the meaningful engagement of consumers with their 
own health care and protects patients from the likelihood of 
unanticipated health care costs. As such, the regulations fulfill the 
mandate of Executive Order 13877.
    For the foregoing reasons, the final rules adopt the majority of 
the provisions in the proposed rules, with certain modifications, as 
described in detail in the following sections of this preamble.

II. Overview of the Final Rules Regarding Transparency--the Departments 
of the Treasury, Labor, and Health and Human Services

    The Departments are finalizing price transparency requirements set 
forth in the final rules in 26 CFR 54.9815-2715A1, 54.9815-2715A2, and 
54.9815-2715A3, 29 CFR 2590.715-2715A1, 2590.715-2715A2, and 2590.715-
2715A3, and 45 CFR 147.210, 147.211, and 147.212. The final rules 
separate the proposed regulations all contained in 26 CFR 54.9815-
2715A, 29 CFR 2590.715-2715A, and 45 CFR 147.210, into three separate 
regulations for each of the Departments. The regulations set forth the 
scope and relevant definitions in 26 CFR 54.9815-2715A1, 29 CFR 
2590.715-2715A1, and 45 CFR 147.210 (which correspond with paragraph 
(a) of the proposed regulations). The regulations at 26 CFR 54.9815-
2715A2, 29 CFR 2590.715-2715A2, and, 45 CFR 147.211 (which correspond 
with paragraph (b) of the proposed regulations) include: (1) A 
requirement that group health plans and health insurance issuers in the 
individual and group markets disclose to participants, beneficiaries, 
or enrollees upon request, through a self-service tool made available 
by the plan or issuer on an internet website, cost-sharing information 
for a covered item or service from a particular provider or providers, 
and (2) a requirement that plans and issuers make such information 
available in paper form, upon request. As explained in more detail 
later in this preamble, the final rules adopt a three-year, phased-in 
approach with respect to the scope of the requirement to disclose cost-
sharing information. Plans and issuers must make cost-sharing 
information available for 500 items and services identified by the 
Departments for plan years (in the individual market, for policy years) 
beginning on or after January 1, 2023, and must make cost-sharing 
information available for all items and services for plan years (in the 
individual market, for policy years) beginning on or after January 1, 
2024.
    The regulations at 26 CFR 54.9815-2715A3, 29 CFR 2590.715-2715A3, 
and 45 CFR 147.212 (at paragraph (c) of the proposed regulations) 
require that plans and issuers disclose pricing information to the 
public through three machine-readable files. One file requires 
disclosure of payment rates negotiated between plans or issuers and 
providers for all covered items and services. The second file will 
disclose the unique amounts a plan or issuer allowed, as well as 
associated billed charges, for covered items or services furnished by 
out-of-network providers during a specified time period. To reduce the 
complexity and burden of including prescription drug information in the 
negotiated rate machine-readable file, the final rules require a third 
file that will include pricing information for prescription drugs. The 
final rules modify the applicability date for these provisions to plan 
years (in the individual market, policy years) beginning on or after 
January 1, 2022.
    The provisions proposed at paragraph (d) of the proposed 
regulations are finalized in 26 CFR 54.9815-2715A2 and 54.9815-2715A3, 
29 CFR 2590.715-2715A2 and 2590.715-2715A3, and 45 CFR 147.211 and 
147.212 with non-substantive editorial changes for increased 
readability, and with effective dates reflecting the phased approach to 
implementation mentioned earlier and discussed in more detail later in 
this preamble.
    In addition to splitting the final rules into three separate 
regulations for each Department, the Departments have added 
severability clauses to the final rules to emphasize the Departments' 
intent that, to the extent a reviewing court holds that any provision 
of the final rules is unlawful, the remaining rules should take effect 
and be given the maximum effect permitted by law. The final rules 
provide that any provision held to be invalid or unenforceable by its 
terms, or as applied to any person or circumstance, or stayed pending 
further agency action, shall be severable from the relevant section and 
shall not affect the remainder thereof or the application of the 
provision to persons not similarly situated or to dissimilar 
circumstances.
    To streamline the final rules, the Departments have removed 
definitions of terms that are defined in the applicable statute or 
elsewhere in such statutes' implementing regulations and have revised 
certain definitions to provide more clarity. Finally, based on comments 
received, the Departments have reassessed the associated burden 
estimates in the Economic Impact Analysis and Paperwork Burden section 
of this preamble.

A. Definitions

    The final regulations at 26 CFR 54.9815-2715A1(a), 29 CFR 2590.715-
2715A1(a), and 45 CFR 147.210(a) (paragraph (a) of the proposed 
regulations) set forth definitions that are applicable to the 
regulations at 26 CFR 54.9815-2715A2, 29 CFR 2590.715-

[[Page 72177]]

2715A2, and 45 CFR 147.211 (paragraph (b) of the proposed regulations) 
and 26 CFR 54.9815-2715A3, 29 CFR 2590.715-2715A3, 45 CFR 147.212 
(paragraph (c) of the proposed regulations). The Departments have 
revised the proposed definitions of some terms and included new defined 
terms in order to clarify the final requirements of 26 CFR 54.9815-
2715A2, 29 CFR 2590.715-2715A2, and 45 CFR 147.211, and 26 CFR 54.9815-
2715A3, 29 CFR 2590.715-2715A3, and 45 CFR 147.212. Comments on the 
definitions in the proposed rule focused on concerns regarding 
consistency of definitions across related government programs, the 
general need for increased clarity in relation to some proposed 
definitions, and the need for resolution of perceived ambiguities in 
the proposed definitions. In response to these comments, the 
Departments are not finalizing certain proposed definitions that are 
already defined in existing, pertinent regulations. The Departments are 
finalizing revised versions of other proposed definitions to clarify 
their meaning, as well as the policies and requirements adopted in the 
final rules.
    Commenters recommended aligning definitions in the proposed 
regulations with those in other existing regulations to avoid 
conflicts. In light of these recommendations, the Departments are not 
finalizing the proposed definition of ``participant'' under 26 CFR 
54.9815-2715A1, 29 CFR 2590.715-2715A1, or 45 CFR 147.210 because the 
term is already defined in the Departments' regulations at 26 CFR 
54.9801-2, 29 CFR 2590.701-2, and 45 CFR 144.103. Likewise, the 
Departments are not finalizing the proposed definition of 
``beneficiary'' under proposed 45 CFR 145.210 and 29 CFR 2590.715-
2715A1, because the term is already defined under HHS regulation at 45 
CFR 144.103 and in statute at ERISA section 3(8). The Departments, 
however, are finalizing the definition of ``beneficiary'' proposed 
under 26 CFR 54.9815-2715A(a) (now at 26 CFR 54.9815-2715A1), because 
the term is not otherwise defined in Treasury Regulations or the Code. 
Finally, the Departments are not finalizing the proposed definition for 
``qualified health plan'' at 45 CFR 145.210 since the term is not used 
in the regulation text.
    Some commenters requested clarification of the terms 
``participants'' and ``beneficiaries'' because the proposed rules' 
definitions of these terms included individuals who may become eligible 
for a plan or coverage, and as the proposed rules envisioned 
personalized feedback to ``participants'' and ``enrollees'' it would be 
impossible to provide such information to an individual not currently 
enrolled in a plan or coverage. The Departments agree. However, instead 
of modifying existing, applicable definitions for ``participants'' and 
``beneficiaries,'' the final rules, at 26 CFR 54.9815-2715A2, 29 CFR 
2590.715-2715A2, and 45 CFR 147.211, and this preamble below clarify to 
whom these disclosures are required.
    One commenter recommended the Departments define the term ``in-
network provider'' in the final rules to clearly exclude device 
suppliers and manufacturers that, the commenter suggested, have not 
traditionally been considered in-network providers and whose price 
information is of limited value to consumers. The Departments do not 
agree that device suppliers and manufacturers should be excluded. Based 
on the numerous public comments from individuals who support broad 
price transparency for all covered items and services, the Departments 
are of the view that pricing information for all covered items and 
services should be available, including pricing for durable medical 
equipment (DME) or other medical devices that are supplied to a 
participant, beneficiary, or enrollee by a provider under a contract 
with a plan or issuer. To clarify, the final rules define in-network 
provider to mean any provider of items and services with which the plan 
or issuer, or a third-party for a plan or issuer, has a contract 
setting forth the terms under which a covered item or service may be 
provided to a participant, beneficiary, or enrollee. The Departments 
broadened this definition to clarify that even where a provider and a 
plan or issuer have a limited rate agreement of some kind, or a rate 
agreement covering DME, those providers should be considered in-network 
providers for purposes of the final rules. Additionally, if a plan or 
issuer enters into a contract or has such payment arrangements, then 
the pricing information for the specific covered items or services 
subject to that contract or payment arrangement are required to be 
disclosed as part of the internet self-service tool and machine-
readable files.
    The proposed regulations included a definition for ``negotiated 
rate'' to mean the amount a group health plan or health insurance 
issuer, or a third party on behalf of a plan or issuer, has 
contractually agreed to pay an in-network provider for covered items 
and services, pursuant to the terms of an agreement between the 
provider and the plan or issuer, or a third-party on behalf of a plan 
or issuer. Consistent with the proposed and final definitions of 
``items and services,'' plans and issuers are required to disclose 
``negotiated rates'' for encounters, procedures, medical tests, 
supplies, prescription drugs, durable medical equipment, and fees 
(including facility fees) to participants, beneficiaries, and enrollees 
through the internet-based self-service tool (and in paper form) as 
well as to the public through a machine-readable file. One commenter 
requested the Departments clarify the meaning of ``negotiated rate'' 
for prescription drugs, noting that they assumed the Departments 
expected plans and issuers to provide the drug price negotiated by a 
PBM on behalf of the plan. Another commenter asserted that the 
``negotiated rate'' of prescription drugs for disclosure should be the 
price patients will see at the point-of-sale, meaning the undiscounted 
price of the drug, plus dispensing fees. Conversely, another commenter 
stated that dispensing fees are not paid by enrollees or used in 
determining cost-sharing liability. Other commenters suggested that the 
Departments grant plans and issuers flexibility in determining the 
appropriate rate for disclosure, as plans and issuers use a variety of 
different benchmarks, such as the Average Wholesale Price (AWP), or 
Wholesale Acquisition Cost (WAC) which may be considered as the 
``negotiated rate'' for the purpose of determining cost-sharing 
liability under the plan or coverage.
    In the final rules, the Departments have revised the definition of 
``negotiated rate'' to mean the amount a plan or issuer has 
contractually agreed to pay for a covered item or service, whether 
directly or indirectly through a third party administrator (TPA) or 
PBM, to an in-network provider, including an in-network pharmacy or 
other prescription drug dispenser, for covered items or services. The 
final rules adopt the proposed definition with two key modifications. 
First, the term ``third party'' from the proposed definition is 
expanded in the final rules to explicitly refer to ``third-party 
administrator or pharmacy benefit manager.'' Second, the final 
definition of ``negotiated rate'' specifically notes that the term in-
network provider includes an in-network pharmacy or other prescription 
drug dispenser. The purpose of these modifications is to confirm the 
commenter's inference that in the case of prescription drugs, the plan 
or issuer should include the price negotiated for that plan or issuer 
by a PBM. Furthermore, the ``negotiated rate'' in the final rules is 
intended to be broad enough to account for different plan

[[Page 72178]]

designs and benchmarks for determining negotiated rates.
    The final rules also add definitions for the following terms that 
were not included in the proposed regulations: ``billed charge,'' 
``copayment assistance,'' ``derived amount,'' ``historic net price,'' 
``national drug code,'' and ``underlying fee schedule.'' The addition 
of these definitions is discussed later in this preamble.
    One commenter noted that the Departments have proposed definitions 
for ``accumulated amounts,'' ``cost-sharing liability,'' and ``cost-
sharing information'' that are unique to the proposed rules and, in 
some cases, differ from definitions of similar terms used in other 
related regulations. In particular, this commenter recommended that all 
definitions should explicitly recognize that cost sharing can be paid 
by or on behalf of an enrollee, participant, or beneficiary, since that 
is how cost sharing is defined by HHS regulation. The commenter also 
requested that the Departments clarify the proposed definition of 
``accumulated amounts'' and suggested revising the definition to state 
clearly that accumulated amounts are the ``amount of financial 
responsibility a participant, beneficiary, or enrollee has incurred, 
whether satisfied by or on behalf of the participant, beneficiary, or 
enrollee. . . .''
    The Departments recognize that cost sharing may be paid by a third-
party on behalf of an enrollee, participant, or beneficiary. However, 
the Departments are of the view that some plans and issuers do not 
count cost-sharing liability payments made by a third-party towards a 
participant's, beneficiary's, or enrollee's accumulated amounts, and 
modifying the definitions as suggested by the commenter could cause 
confusion in the context of the final rules.
    The Departments have added disclosure requirements that are 
discussed in detail elsewhere in this preamble to address this concern. 
The definitions being finalized also include non-substantive editorial 
changes from the proposed regulations for readability to the following 
terms; ``accumulated amounts,'' ``billing code,'' ``bundled payment 
arrangement,'' ``cost-sharing liability,'' ``cost-sharing 
information,'' ``covered items or services,'' ``item or services,'' and 
``out-of-network allowed amount.''
    The definitions identified as new or substantively modified in this 
section, as well as those that are being finalized as proposed, are 
discussed further in relation to the requirements of 26 CFR 54.9815-
2715A2, 29 CFR 2590.715-2715A2, and 45 CFR 147.211 and 26 CFR 54.9815-
2715A3, 29 CFR 2590.715-2715A3, and 45 CFR 147.212 throughout this 
preamble.

B. Requirements for Disclosing Cost-Sharing Information to 
Participants, Beneficiaries, and Enrollees

    The final rules are intended to enable participants, beneficiaries, 
and enrollees to obtain an estimate of their potential cost-sharing 
liability for covered items and services they might receive from a 
particular health care provider, consistent with the requirements of 
section 2715A of the PHS Act and section 1311(e)(3)(C) of PPACA. 
Accordingly, the Departments proposed in paragraph (b) of the proposed 
regulations to require group health plans and health insurance issuers 
to disclose certain information relevant to a determination of a 
consumer's out-of-pocket costs for a particular health care item or 
service in accordance with specific method and format requirements, 
upon the request of a participant, beneficiary, or enrollee.
    A majority of commenters supported the Departments' proposal and 
urged the Departments to finalize this section of the proposed rules. 
Many commenters were supportive of being able to know their costs 
before receiving care in order to make informed shopping decisions. 
Some commenters agreed that consumers should have access to cost 
information in advance of receiving care, but suggested modifications 
to the proposed requirements. The final rules adopt the requirement 
that plans and issuers disclose certain cost-sharing information for a 
particular health care item or service, generally as set forth in the 
proposed rules, but with certain modifications and clarifications 
explained later in this section of this preamble.
1. Information Required To Be Disclosed to Participants, Beneficiaries, 
or Enrollees
    Based on significant research and review of public comments, the 
Departments concluded that requiring group health plans and health 
insurance issuers to disclose to participants, beneficiaries, or 
enrollees cost-sharing information in the manner most familiar to them 
is the best means to empower individuals to understand their potential 
cost-sharing liability for covered items and services furnished by 
particular providers. The Departments, therefore, modeled the proposed 
price transparency requirements on existing notice requirements.
    Specifically, section 2719 of the PHS Act (incorporated into the 
Code by section 9815 of the Code and into ERISA by section 715 of 
ERISA) requires non-grandfathered plans and issuers offering non-
grandfathered coverage in the individual or group markets to provide a 
notice of adverse benefit determination (typically satisfied by the 
EOB) to participants, beneficiaries, or enrollees after health care 
items or services are furnished and claims for benefits are 
adjudicated. EOBs typically include the amount billed by a provider for 
items and services, negotiated rates or underlying fee schedules with 
in-network providers or allowed amounts for out-of-network providers, 
the amount the plan paid to the provider, and the individual's 
obligation for deductibles, copayments, coinsurance, and any other 
balance under the provider's bill. Consumers are accustomed to seeing 
cost-sharing information as it is presented in an EOB. The proposed 
rules were intended to similarly require plans and issuers to provide 
the specific price and benefit information on which an individual's 
cost-sharing liability is based. Based on comments, the Departments are 
of the view that participants, beneficiaries, and enrollees would also 
benefit from understanding the price of items and services, even in 
circumstances when their cost-sharing liability is not based upon a 
negotiated rate or underlying fee schedule rate. Given this primary 
goal of overall price transparency, the Departments are requiring 
disclosure of the negotiated rate, even if it is not the amount used as 
the basis for cost-sharing liability.
    The proposed rules set forth seven content elements that a plan or 
issuer must disclose, upon request, to a participant, beneficiary, or 
enrollee for a covered item or service: estimated cost-sharing 
liability, accumulated amounts, negotiated rates, out-of-network 
allowed amounts, a list of items and services subject to bundled 
payment arrangements, a notice of prerequisites, if applicable, and a 
disclosure notice. These seven content elements generally reflect the 
same information that is included in an EOB after health care services 
are provided. The Departments determined that each of the seven content 
elements, as well as two additional content elements, are necessary and 
appropriate to implement the mandates of section 2715A of the PHS Act 
and section 1311(e)(3)(C) of PPACA by permitting individuals to learn 
the amount of their cost-sharing liability and understand the price for 
specific items or services under a plan

[[Page 72179]]

or coverage from a particular provider. The final rules adopt the 
requirement that plans and issuers must satisfy these elements through 
disclosure of actual data relevant to an individual's cost-sharing 
liability that is accurate at the time the request is made. The 
Departments acknowledge that plans and issuers may not have processed 
all of an individual's outstanding claims when the individual requests 
the information; therefore, plans and issuers would not be required to 
account for outstanding claims that have not yet been fully processed. 
As set forth in 26 CFR 54.9815-2715A2, 29 CFR 2590.715-2715A2, and 45 
CFR 147.211 this cost-sharing information must be disclosed upon 
request in two ways: (1) Through a self-service tool that meets certain 
standards and is available on an internet website, and (2) in paper 
form, if requested by the participant, beneficiary, or enrollee.
    Furthermore, under the final rules, the cost-sharing information 
must be disclosed to the participant, beneficiary, or enrollee in plain 
language. The final rules define ``plain language'' to mean written and 
presented in a manner calculated to be understood by the average 
participant, beneficiary, or enrollee. Determining whether this 
standard has been satisfied requires an exercise of considered judgment 
and discretion, taking into account such factors as the level of 
comprehension and education of typical participants, beneficiaries, or 
enrollees in the plan or coverage and the complexity of the terms of 
the plan or coverage. Accounting for these factors would likely require 
limiting or eliminating the use of technical jargon and long, complex 
sentences, so that the information provided will not have the effect of 
misleading, misinforming, or failing to inform participants, 
beneficiaries, or enrollees.
    Several commenters agreed that the information found in an EOB is a 
good basis for informing individuals of their cost-sharing liability 
and will effectively further coverage transparency efforts. One 
commenter stated that information found in an advance EOB is neither a 
trade secret, nor proprietary, as it is routinely disclosed following 
care. Other commenters expressed concern about this concept of an 
advance EOB, stating that most plans and issuers do not have access to 
all the information necessary to provide beneficiaries with an upfront 
adjudication of the beneficiary's claim, and that the vast majority of 
data provided via online tools now rely on estimated costs drawn from 
publicly available sources rather than personal information and 
circumstances.
    Many commenters expressed concerns that the elements and methods of 
disclosure proposed by the Departments are overly prescriptive, 
hindering health plan innovation and requiring potentially significant 
reworking of existing transparency tools, as well as requiring massive 
IT and resource investments by all commercial plans and issuers to 
develop, build or modify, test, and implement tools that meet the new 
standards. Several commenters recommended providing plans and issuers 
with flexibility to build upon current systems. Another commenter urged 
the Departments to evaluate the individualized tools currently 
available, and that if requirements for cost-estimator tools are 
adopted, they should give carriers and TPAs maximum flexibility in 
designing their tools. One commenter felt a better approach would be to 
educate consumers about the online tools that are currently available 
and assist employers to encourage their use. Several commenters opposed 
the requirement to provide the tool and suggested the Departments 
remove this requirement from the final rules altogether. These 
commenters stated that price estimator tools should not be required, 
citing studies showing low tool utilization by consumers and plan 
participants, beneficiaries, or enrollees. These commenters stated that 
the administration should instead focus on educating consumers about 
the online tools that are currently available and assisting employers 
and plans in encouraging their use.
    The Departments are of the view that modeling the pricing 
disclosures on the elements provided within an EOB is both reasonable 
and appropriate. The Departments acknowledge the potential burden of 
updating existing tools to comply with the final rules, but the 
Departments think that the potential burden is outweighed by the 
importance of all enrollees, beneficiaries, and participants having 
access to self-service tools that provide a baseline of accurate 
pricing elements. The Departments also acknowledge that, historically, 
there has been low utilization of existing tools; however, the 
Departments are of the view that by creating minimum uniform standards, 
consumers will have access to more reliable, personalized estimates and 
will be more likely to use the tools.
    As described earlier in this preamble, through independent 
examination and engagement with stakeholders, the Departments are of 
the view that existing tools vary widely in usability and reliability 
due to the lack of minimum standards.\106\ The Departments received 
thousands of supportive comments from individuals eager for access to 
transparent pricing information, indicating that the current tools 
available are inadequate in practice. Furthermore, as discussed in 
great detail throughout this preamble, as consumers increasingly become 
financially responsible for a greater proportion of the cost of their 
care (through deductible and coinsurance requirements, for example) 
they have a vested interest in comparing prices of potential providers 
and such items as prescription drugs. As such, it is likely in the best 
interest of plans, issuers, and providers to promote and educate their 
consumers on the benefits of these shopping tools, and the Departments 
encourage them to do so. The Departments do not agree with the 
commenter who stated that educating consumers regarding existing tools 
and encouraging their use would be a better approach than requiring the 
self-service tool as proposed. While the Departments agree that 
educating consumers on existing self-service tools is important, it 
does not replace the benefits of making reliable self-service tools 
available to most participants, beneficiaries, and enrollees in private 
market plans and coverages. The Departments are of the view that 
minimum consistent requirements for all plans and issuers may lead to 
an increase in health literacy and drive consumerism as participants, 
beneficiaries, and enrollees become more familiar with how plans and 
issuers calculate cost-sharing liability. Furthermore, the final rules 
adopt a phased implementation approach to these requirements as a 
mechanism to help mitigate the associated implementation burdens.
---------------------------------------------------------------------------

    \106\ ``Are healthcare's cost estimate tools making matters 
worse for patients?'' Becker's Hospital CFO Report, November 2015. 
Available at: https://www.beckershospitalreview.com/finance/are-healthcare-s-cost-estimate-tools-making-matters-worse-for-patients.html. Citing Gordon, E. ``Patients Want to Price-Shop For 
Care, But Online Tools Unreliable.'' NPR. November 30, 2015, 
Available at https://www.npr.org/sections/health-shots/2015/11/30/453087857/patients-want-to-price-shop-for-care-but-online-tools-unreliable. (``Some estimators reflect a combined range of possible 
costs, while others are based off historical pricing or claims data 
from various sources. Many online estimate tools are restricted in 
the types of procedures they include. . .'').
---------------------------------------------------------------------------

    Some commenters requested that the Departments confirm that the 
intent of the proposed rules is that only participants and 
beneficiaries enrolled in the plan would have access to the tool, 
noting that the proposed regulations used the ERISA definitions of 
``participant'' and ``beneficiary,''

[[Page 72180]]

which include individuals who may become eligible for the plan. Many 
commenters encouraged the Departments to also require that plans and 
issuers make cost-sharing information easily accessible to authorized 
representatives--which may include health care providers--so that they 
can better respond to patient inquiries. These commenters suggested 
that patients reasonably turn to providers for this information when 
contemplating or scheduling health care services, but providers often 
face barriers in accessing the necessary details from issuers to 
provide a timely, accurate estimate. Commenters suggested that plans 
and issuers should be required to give providers access to their 
patients' specific benefit information via a secure website, subject to 
patient consent. One commenter recommended that the tool be made 
applicable for the public while they are in the shopping and plan 
selection phase, not just after someone is enrolled in a plan. This 
commenter suggested that true cost transparency would not be possible 
if this information was not made available in advance.
    The final rules clarify that disclosures of cost-sharing 
information are only required to individuals who are enrolled in the 
plan or coverage; no disclosures are required to be made to a 
``participant'' or ``beneficiary'' solely because they might become 
eligible for the plan in the future. This is reflected by a revision to 
the proposed language being finalized at 26 CFR 54.9815-2715A2(b), 29 
CFR 2590.715-2715A2(b), and 45 CFR 147.211(b) to refer to plans and 
issuers providing cost-sharing information to a participant, 
beneficiary, or enrollee who is enrolled in a plan or coverage. The 
Departments understand the value in provider access to cost-sharing 
information required under the final rules. However, this rulemaking 
focuses on implementing the statutory obligation for plans to make this 
information available to participants, beneficiaries, and enrollees. A 
participant, beneficiary, or enrollee may choose to share information 
regarding their personal cost-sharing liability with a provider for the 
purposes of making health care decisions. The final rules also require 
that this information must be provided to a participant's, 
beneficiary's, or enrollee's authorized representative. Under other 
applicable regulations, participants, beneficiaries, or enrollees may 
appoint a health care provider as their authorized representative.\107\
---------------------------------------------------------------------------

    \107\ 29 CFR 2560.503-1(b)(4); see also 26 CFR 54.9815-
2719(b)(2)(i), 29 CFR 2590.715-2719(b)(2)(ii), and 45 CFR 
147.136(b)(2)(ii).
---------------------------------------------------------------------------

    Regarding whether other types of information should be required to 
be disclosed in the self-service tool, several commenters expressed 
concern that information regarding cost without accompanying provider 
quality information could have a detrimental effect on overall health 
care cost and delivery of value-based care. One commenter stated that 
shifting care to a lower-cost provider could have unintended 
consequences of higher costs associated with unnecessary or improper 
care. Commenters recommended that a quality metric be included and that 
quality information be allowed to be included alongside price.
    As discussed in the background section of this preamble and later 
in this preamble, the Departments acknowledge that quality information 
could be a valuable addition to a self-service tool. However, the 
Departments did not propose to require disclosure of quality 
information. Rather, the Departments sought comments regarding quality 
information in the proposed rules and plan to take those comments into 
consideration for future action. The Departments encourage plans and 
issuers to further innovate around the baseline standards outlined 
above and include quality information and other metrics not required by 
the final rules that would assist in consumer decision-making.
    Several commenters suggested that plans and issuers should be 
required to disclose information not directly related to cost sharing. 
One commenter urged the Departments to include an additional 
requirement in the final rules for plans and issuers to provide 
consumers with information they need to fully understand their cost-
sharing obligations for emergency services at the time they obtain 
their coverage, and recommended plans and issuers also update this 
information on an annual basis or when major changes occur that would 
impact their access to, and overall cost of, emergency care, such as 
changes to their provider. Another commenter recommended that when 
consumers enter a search for a primary service or treatment, that they 
also be provided with an ``alert'' that additional services, such as 
anesthesia, pathology, or laboratory tests, likely will be involved and 
will entail additional costs, which should also be disclosed. Another 
commenter requested that the Departments add the ``type of plan'' (for 
example, ERISA-covered group health plan, a QHP, a Medicare Advantage 
plan, a Medicaid MCO plan, an individual health plan, or a plan that is 
grandfathered from PPACA requirements) and in what state the plan is 
providing coverage as disclosure content elements that health plans 
would be required to post on the proposed internet-based self-service 
tool, so that the information is readily available.
    The Departments recognize the benefit of providing information for 
emergency services at the time consumers obtain their coverage. The 
Departments are of the view, however, that existing rules governing 
summaries of benefits and coverage are designed to provide such 
information to consumers at the time they obtain coverage. As such, the 
Departments are not inclined to duplicate existing requirements in the 
final rules. The Departments also acknowledge that alerting consumers 
to additional services associated with a service or treatment for which 
they searched could be beneficial. For this reason, the final rules 
provide plans and issuers flexibility to give disclaimers that can 
address the likelihood that services in addition to the one for which a 
consumer searched will be necessary. The final rules also require that 
plans and issuers outline individual services when a consumer requests 
an estimate for a service that, per the agreement between a payer and a 
provider, will be provided and billed as a bundle. Plans and issuers 
are also free to provide such information in any way they so choose, 
including through an alert. The Departments are also of the view that 
participants, beneficiaries, and enrollees are generally aware of the 
type of plan they are enrolled in or can reasonably access this 
information by contacting their plan or issuer and therefore decline to 
require this information as part of the final rules.
Scope of Items and Services
    Many commenters stated that the requirement to disclose the price 
of all covered items and services was overly broad and overly 
burdensome, and instead suggested the Departments limit disclosure to a 
core set of ``shoppable services'' that are commonly searched for in 
existing cost-estimator tools. Many commenters referenced the recently 
finalized definition of a shoppable service that was included in the 
Hospital Price Transparency final rule as ``a service that can be 
scheduled by a health care consumer in

[[Page 72181]]

advance.'' \108\ Two commenters recommended no more than 300 shoppable 
items and services, while another suggested a limit of 200. As a way to 
reduce the cost burden, one commenter suggested that the requirements 
under the rules be limited to services that are priced above a certain 
threshold and provided $5,000 as an example. One commenter said the 
Departments should permit health plans and issuers to tailor their 
tools to best meet their enrollees' and providers' demonstrated needs 
and priorities, including selection of the items and services for which 
estimates are most useful and meaningful for participants, 
beneficiaries, and enrollees. Another commenter recommended that the 
cost-sharing requirement be limited to items and services where the 
estimated out-of-pocket price is frequently the same as the final 
price. Another recommended the tool not require data on those items/
services with volatile prices or low volume.
---------------------------------------------------------------------------

    \108\ 84 FR 65524 (Nov. 27, 2019) (codified at 45 CFR 180.20).
---------------------------------------------------------------------------

    One commenter, representing many plans and issuers, provided a list 
of 421 items and services that they recommended including under this 
disclosure requirement. The recommended list of 421 items and services 
are a result of an analysis the commenter performed which compared 
member feedback, claims frequency, operational feasibility, and state 
mandates and regulations, as well as variability of cost and search 
frequency. All 421 items and services were included by, at the minimum, 
a subset of issuers, indicating confidence that the covered items and 
services were shoppable. This commenter also noted that their survey of 
existing tools found a median of 526 services available to consumers 
enrolled in commercial coverage.
    A few commenters recommended that the Departments limit the list of 
items and services to only major medical services. One commenter 
recommended the Departments not include cost sharing for DME. Several 
commenters suggested that a Technical Expert Panel (TEP) was needed to 
review data and input from stakeholders, advise on research the 
Departments should undertake, and determine which items and services 
and functional requirements would be suitable to include in the future.
    Many individual commenters expressed their desire for dental, 
vision, and other excepted benefits to be included under the 
requirements of the final rules or in the near future. Further, a 
majority of individual commenters encouraged the Departments to require 
the inclusion of all items and services, stating that consumers have a 
right to know this information for all items and services in advance. 
Several commenters recommended that the rules be implemented in a more 
gradual phased-in timeline, by requiring the tool to cover a narrower 
data set of the most common shoppable services first and then broadened 
to eventually include all items and services. Another commenter stated 
that to the extent that the services include non-medical estimates like 
pharmacy and dental costs, those costs could likely only be included by 
allowing third parties that fulfill those benefits to provide separate 
transparency tools that integrate with a plan's tool.
    The Departments agree with commenters who stated that consumers 
should be given price estimates in advance, and the Departments 
understand that what is considered useful and meaningful pricing 
information is likely to be unique to an individual's circumstances. 
For these reasons, and the rationale for this rulemaking described 
throughout this preamble, the Departments decline to accept suggestions 
related to limiting the number or types of items and services included 
under this requirement. However, the Departments acknowledge the 
potential burden of incorporating all items and services into a self-
service tool immediately and are therefore finalizing a phased-in 
implementation timeline. Under the final rules, plans and issuers are 
required to provide estimates for the 500 items and services identified 
in Table 1 for plan years (in the individual market, for policy years) 
beginning on or after January 1, 2023. However, plans and issuers will 
be required to disclose pricing information with respect to all items 
and services for plan years (in the individual market, for policy 
years) beginning on or after January 1, 2024. Given that pricing 
estimates for all items and services will ultimately be required, the 
Departments do not find it necessary to convene a TEP to determine 
which items and services and functional requirements would be suitable 
to include in the future.
    Further, in finalizing the provision that plans and issuers 
disclose cost-sharing liability information for all covered items and 
services, the Departments are clarifying that cost-sharing information 
must also be provided for covered prescription drugs and DME. As 
discussed later in this preamble, a plan or issuer will be considered 
compliant with this requirement if it offers its participants, 
beneficiaries, or enrollees access to the pricing information that is 
required under 26 CFR 54.9815-2715A2, 29 CFR 2590.715-2715A2, and 45 
CFR 147.211, through a third-party tool, such as a PBM tool. As 
discussed elsewhere in this preamble, the Departments clarify that 
excepted benefits, such as limited-scope dental benefits offered under 
a separate policy, certificate, or contract of insurance that are not 
an integral part of a group health plan or health insurance coverage, 
are not subject to the requirements established under the final rules.
    In developing the list of 500 items and services that are required 
to be included in the self-service tool during the first year of 
implementation, the Departments considered the recommendations made by 
the commenters to include shoppable items and services that are 
commonly used in existing tools. As mentioned above, in a survey of 
existing price transparency tools currently in use, one commenter found 
that the median number of items and services in existing tools is 526. 
Table 1 lists 500 items and services that will be required to be 
included in the first phase of implementation of the internet-based 
self-service tool. The Departments will publish a copy of this list on 
a publicly available website. The majority of these items and services 
(416) are based on the recommendation of several stakeholders. The 
Departments have determined not to include five of the recommended 
codes because they have since been retired. The Departments augmented 
the list with 84 additional services. These 84 services reflect some of 
the most frequently found services in External Data Gathering 
Environment (EDGE) \109\ data, which are representative of services 
commonly provided in the individual and small group (or merged) 
markets. The Departments also examined the aggregate claims costs 
associated with these services nationally and concluded that these 
services could

[[Page 72182]]

have significant cost variability, ranging from the 25th percentile to 
the 75th percentile of costs, depending on service.
---------------------------------------------------------------------------

    \109\ CMS began collecting enrollee-level data from issuers' 
EDGE servers beginning with the 2016 benefit year. See the HHS 
Notice of Benefit and Payment Parameters for 2018; Final Rule, 81 FR 
94058, 94101-94103 (Dec. 22, 2016). The enrollee-level EDGE data 
collected by CMS includes an enrollment file, a medical claims file, 
a pharmacy claims file, and a supplemental diagnosis file for risk 
adjustment-covered plans in the states where HHS operates the risk 
adjustment program. CMS does not collect enrollee-identifiable 
elements to safeguard enrollee privacy and issuers' proprietary 
information. See, for example, 45 CFR 153.720.

                  Table 1--500 Items and Services List
------------------------------------------------------------------------
       Code               Description         Plain language description
------------------------------------------------------------------------
J0702.............  BETAMETHASONE ACET&SOD   Injection to treat reaction
                     PHOSP.                   to a drug.
J1745.............  INFLIXIMAB NOT BIOSIMIL  A biologic medication.
                     10MG.
G0102.............  Prostate cancer          ...........................
                     screening; digital
                     rectal examination.
G0103.............  Prostate cancer          ...........................
                     screening; prostate
                     specific antigen test
                     (psa).
G2061.............  Qualified non physician  Qualified non physician
                     healthcare               healthcare professional
                     professional online      online assessment, for an
                     assessment; 5-10         established patient, for
                     minutes.                 up to seven days,
                                              cumulative time during the
                                              7 days; 5-10 minutes.
G2062.............  Qualified non physician  Qualified non physician
                     healthcare               healthcare professional
                     professional online      online assessment service,
                     assessment service; 11-  for an established
                     20 minutes.              patient, for up to seven
                                              days, cumulative time
                                              during the 7 days; 11-20
                                              minutes.
G2063.............  Qualified non physician  Qualified non physician
                     qualified healthcare     qualified healthcare
                     professional             professional assessment
                     assessment service;      service, for an
                     21+ minutes.             established patient, for
                                              up to seven days,
                                              cumulative time during the
                                              7 days; 21 or more
                                              minutes.
G0206.............  Diagnostic mammography,  ...........................
                     including computer-
                     aided detection (cad)
                     when performed;
                     unilateral.
G0204.............  Diagnostic mammography,  ...........................
                     including computer-
                     aided detection (cad)
                     when performed;
                     bilateral.
G0121.............  Colon ca scrn; not hi    Colorectal cancer
                     risk ind.                screening; colonoscopy on
                                              individual not meeting
                                              criteria for high risk.
G0105.............  Colorectal ca scrn; hi   Colorectal cancer
                     risk ind.                screening; colonoscopy on
                                              individual at high risk.
S0285.............  Cnslt before screen      Colonoscopy consultation
                     colonosc.                performed prior to a
                                              screening colonoscopy
                                              procedure.
G0289.............  Arthro, loose body +     Arthroscopy, knee,
                     chondro.                 surgical, for removal of
                                              loose body, foreign body,
                                              debridement/shaving of
                                              articular cartilage
                                              (chondroplasty) at the
                                              time of other surgical
                                              knee arthroscopy in a
                                              different compartment of
                                              the same knee.
G0120.............  Colon ca scrn; barium    Colorectal cancer
                     enema.                   screening; alternative to
                                              g0105, screening
                                              colonoscopy, barium enema.
460...............  SPINAL FUSION            Spinal fusion except
                     (POSTERIOR).             cervical.
470...............  KNEE REPLACEMENT.......  Major joint replacement or
                                              reattachment of lower
                                              extremity.
473...............  SPINAL FUSION            Cervical spinal fusion.
                     (ANTERIOR).
743...............  HYSTERECTOMY...........  Uterine and adnexa
                                              procedures for non-
                                              malignancy.
1960..............  Anesthesia for vaginal   ...........................
                     delivery.
1961..............  Anesthesia for cesarean  ...........................
                     delivery.
1967..............  Anesthesia for labor     ...........................
                     during planned vaginal
                     delivery.
1968..............  Anesthesia for cesarean  ...........................
                     delivery following
                     labor.
10005.............  FNA W IMAGE............  Fine needle aspiration
                                              biopsy, including
                                              ultrasound guidance; first
                                              lesion.
10021.............  FNA W/O IMAGE..........  Fine Needle Aspiration
                                              Biopsy without imaging.
10040.............  ACNE SURGERY...........  Incision and Drainage
                                              Procedures on the Skin,
                                              Subcutaneous and Accessory
                                              Structures.
10060.............  DRAINAGE OF SKIN         Incision and drainage of
                     ABSCESS.                 abscess; simple or single
                                              and complex or multiple.
10140.............  DRAINAGE OF HEMATOMA/    Incision and drainage of
                     FLUID.                   hematoma, seroma or fluid
                                              collection.
10160.............  PUNCTURE DRAINAGE OF     Puncture aspiration of
                     LESION.                  abscess, hematoma, bulla,
                                              or cyst.
11000.............  DEBRIDE INFECTED SKIN..  Removal of infected skin.
11056.............  TRIM SKIN LESIONS 2 TO   Paring or cutting of benign
                     4.                       hyperkeratotic lesion.
11102.............  BIOPSY SKIN LESION.....  Tangential biopsy of skin
                                              (for example, shave,
                                              scoop, saucerize,
                                              curette); single lesion.
11103.............  BIOPSY SKIN ADD-ON.....  Tangential biopsy of skin
                                              (for example, shave,
                                              scoop, saucerize,
                                              curette); each separate/
                                              additional lesion.
11200.............  REMOVAL OF SKIN TAGS 15 common
                     MORE.                    or plantar warts.
17250.............  CHEM CAUT OF GRANLTJ     Chemical destruction of pre-
                     TISSUE.                  cancerous lesions of the
                                              skin.

[[Page 72183]]

 
17311.............  MOHS 1 STAGE H/N/HF/G..  Micrographic technique,
                                              including removal of all
                                              gross tumor, surgical
                                              excision of tissue
                                              specimens, mapping, color
                                              coding of specimens,
                                              microscopic examination of
                                              specimens.
19120.............  REMOVAL OF BREAST        ...........................
                     LESION.
20550.............  INJ TENDON SHEATH/       Injection of medication
                     LIGAMENT.                into a tendon or ligament.
20551.............  INJ TENDON ORIGIN/       Injection of medication
                     INSERTION.               into the tendon/ligament
                                              origin.
20553.............  INJECT TRIGGER POINTS 3/ Injection of medication
                     >.                       into an area that triggers
                                              pain.
20600.............  DRAIN/INJ JOINT/BURSA W/ Draining or injecting
                     O US.                    medication into a small
                                              joint/bursa without
                                              ultrasound.
20605.............  DRAIN/INJ JOINT/BURSA W/ Draining or injecting
                     O US.                    medication into a large
                                              joint/bursa without
                                              ultrasound.
20610.............  DRAIN/INJ JOINT/BURSA W/ Draining or injecting
                     O US.                    medication into a major
                                              joint/bursa without
                                              ultrasound.
20612.............  ASPIRATE/INJ GANGLION    Removal of fluid or
                     CYST.                    injection of medication
                                              into a ganglion cyst.
27440.............  Revision of knee joint.  Repair of knee joint.
27441.............  Revision of knee joint.  Repair of knee joint.
27442.............  Revision of knee joint.  Repair of knee joint.
27443.............  Revision of knee joint.  Repair of knee joint.
27445.............  Revision of knee joint.  Repair of knee joint with
                                              hinged prosthesis.
27446.............  Revision of knee joint.  Repair of knee joint.
28296.............  CORRECTION HALLUX        Under Repair, Revision, and/
                     VALGUS.                  or Reconstruction
                                              Procedures on the Foot and
                                              Toes.
29826.............  Subacromial              Shaving of shoulder bone
                     Decompression.           using an endoscope.
29848.............  WRIST ENDOSCOPY/SURGERY  Carpal tunnel release.
29880.............  KNEE ARTHROSCOPY/        Surgery to remove of all or
                     SURGERY.                 part of a torn meniscus in
                                              both medial and lateral
                                              compartments.
29881.............  KNEE ARTHROSCOPY/        Surgery to remove of all or
                     SURGERY.                 part of a torn meniscus in
                                              one compartment.
29888.............  KNEE ARTHROSCOPY/        ACL reconstruction.
                     SURGERY.
30520.............  REPAIR OF NASAL SEPTUM.  Repair procedures of the
                                              nose.
31231.............  NASAL ENDOSCOPY DX.....  Nasal endoscopy,
                                              diagnostic, unilateral or
                                              bilateral.
31237.............  NASAL/SINUS ENDOSCOPY    Surgical nasal/sinus
                     SURG.                    endoscopy with biopsy,
                                              polypectomy or
                                              debridement.
31575.............  DIAGNOSTIC LARYNGOSCOPY  Flexible, fiberoptic
                                              diagnostic laryngoscopy.
36415.............  ROUTINE VENIPUNCTURE...  Collection of venous blood
                                              by venipuncture.
36471.............  NJX SCLRSNT MLT          Injections to remove spider
                     INCMPTNT VN.             veins on the limbs or
                                              trunk.
36475.............  ENDOVENOUS RF 1ST VEIN.  Ablation of incompetent
                                              vein.
36478.............  ENDOVENOUS LASER 1ST     Laser removal of
                     VEIN.                    incompetent vein.
42820.............  REMOVE TONSILS AND       Removal of tonsils and
                     ADENOIDS.                adenoid glands patient
                                              younger than age 12.
42826.............  REMOVAL OF TONSILS.....  Primary or secondary
                                              removal of tonsils.
42830.............  REMOVAL OF ADENOIDS....  Primary removal of the
                                              adenoids.
43235.............  EGD DIAGNOSTIC BRUSH     Diagnostic examination of
                     WASH.                    esophagus, stomach, and/or
                                              upper small bowel using an
                                              endoscope.
43239.............  EGD BIOPSY SINGLE/       Biopsy of the esophagus,
                     MULTIPLE.                stomach, and/or upper
                                              small bowel using an
                                              endoscope.
43846.............  Gastric restrictive      Surgical procedure used for
                     procedure, with          weight loss resulting in a
                     gastric bypass for       partial removal of
                     morbid obesity; with     stomach.
                     small intestine
                     reconstruction to
                     limit absorption.
44388.............  Colonoscopy thru stoma   Diagnostic examination of
                     spx.                     large bowel using an
                                              endoscope which is
                                              inserted through abdominal
                                              opening.
44389.............  Colonoscopy with biopsy  Biopsies of large bowel
                                              using an endoscope which
                                              is inserted through
                                              abdominal opening.
44394.............  Colonoscopy w/snare....  Removal of large bowel
                                              polyps or growths using an
                                              endoscope.
45378.............  DIAGNOSTIC COLONOSCOPY.  Diagnostic examination of
                                              large bowel using an
                                              endoscope.
45379.............  Colonoscopy w/fb         Removal of foreign bodies
                     removal.                 in large bowel using an
                                              endoscope.
45380.............  COLONOSCOPY AND BIOPSY.  Biopsy of large bowel using
                                              an endoscope.
45381.............  Colonoscopy submucous    Injections of large bowel
                     njx.                     using an endoscope.
45382.............  Colonoscopy w/control    Control of bleeding in
                     bleed.                   large bowel using an
                                              endoscope.
45384.............  Colonoscopy w/lesion     Removal of polyps or
                     removal.                 growths in large bowel
                                              using an endoscope.
45385.............  COLONOSCOPY W/LESION     Removal of polyps or
                     REMOVAL.                 growths of large bowel
                                              using an endoscope.
45386.............  Colonoscopy w/balloon    Balloon dilation of large
                     dilat.                   bowel using an endoscope.
45388.............  Colonoscopy w/ablation.  Destruction of large bowel
                                              growths using an
                                              endoscope.
45390.............  Colonoscopy w/resection  Removal of large bowel
                                              tissue using an endoscope.
45391.............  Colonoscopy w/endoscope  Ultrasound examination of
                     us.                      lower large bowel using an
                                              endoscope.
45392.............  Colonoscopy w/           Ultrasound guided needle
                     endoscopic fnb.          aspiration or biopsy of
                                              lower large bowel using an
                                              endoscope.
45398.............  Colonoscopy w/band       Tying of large bowel using
                     ligation.                an endoscope.
47562.............  LAPAROSCOPIC             Removal of gallbladder
                     CHOLECYSTECTOMY.         using an endoscope.
47563.............  LAPARO CHOLECYSTECTOMY/  Gallbladder removal with
                     GRAPH.                   use of an x-ray exam of
                                              the bile ducts.
49505.............  PRP I/HERN INIT REDUC    Repair of groin hernia
                     >5 YR.                   patient age 5 years or
                                              older.
49585.............  RPR UMBIL HERN REDUC >   Repair of umbilical hernia
                     5 YR.                    in patients over 5 years
                                              old.
49650.............  LAP ING HERNIA REPAIR    Inguinal hernia repair done
                     INIT.                    by laparoscope.
50590.............  FRAGMENTING OF KIDNEY    Surgical procedures on the
                     STONE.                   kidney to break up and
                                              remove kidney stones.
51741.............  ELECTRO-UROFLOWMETRY     A diagnostic test used to
                     FIRST.                   measure the flow of urine.
51798.............  US URINE CAPACITY        Ultrasound of bladder to
                     MEASURE.                 measure urine capacity.
52000.............  CYSTOSCOPY.............  Procedure on the bladder.
52310.............  CYSTOSCOPY AND           Removing an indwelling
                     TREATMENT.               ureteral stent by
                                              cystoscopy.

[[Page 72184]]

 
52332.............  CYSTOSCOPY AND           Ureteral stents inserted
                     TREATMENT.               internally between the
                                              bladder and the kidney and
                                              will remain within the
                                              patient for a defined
                                              period of time.
55250.............  EXCISION PROCEDURES ON   Removal of sperm duct(s).
                     THE VAS DEFERENS.
55700.............  Prostate biopsy........  Biopsy of prostate gland.
55866.............  Surgical Procedures on   Surgical removal of
                     the Prostate.            prostate and surrounding
                                              lymph nodes using an
                                              endoscope.
57022.............  Incision and drainage    ...........................
                     of vaginal blood
                     accumulation following
                     delivery.
57288.............  REPAIR BLADDER DEFECT..  Replacement of sling to
                                              support the bladder.
57454.............  BX/CURETT OF CERVIX W/   Biopsy of cervix or uterus.
                     SCOPE.
58100.............  EXCISION PROCEDURES ON   Biopsy of the lining of the
                     THE CORPUS UTERI.        uterus.
58558.............  HYSTEROSCOPY BIOPSY....  Surgical hysteroscopy with
                                              biopsy.
58563.............  HYSTEROSCOPY ABLATION..  Surgical procedure used to
                                              treat premenopausal
                                              abnormal uterine bleeding.
58565.............  HYSTEROSCOPY             Laparoscopic/Hysteroscopic
                     STERILIZATION.           Procedures on the uterus.
58571.............  TLH W/T/O 250 G OR LESS  Laparoscopic hysterectomy.
58661.............  LAPAROSCOPY REMOVE       Removal of either benign or
                     ADNEXA.                  malignant tissue from the
                                              uterus, ovaries, fallopian
                                              tubes, or any of the
                                              surrounding tissues using
                                              a laparoscope.
58662.............  LAPAROSCOPY EXCISE       Removal of lesions of the
                     LESIONS.                 ovary, pelvic viscera, or
                                              peritoneal surface.
58671.............  LAPAROSCOPY TUBAL BLOCK  Laparoscopic tubal
                                              sterilization is surgery
                                              to block the fallopian
                                              tubes to prevent
                                              pregnancy.
59000.............  AMNIOCENTESIS            Removal of amniotic fluid
                     DIAGNOSTIC.              from the uterus for
                                              diagnostic purposes.
59025.............  FETAL NON-STRESS TEST..  A common prenatal test used
                                              to check on a baby's
                                              health.
59400.............  OBSTETRICAL CARE.......  Obstetrical pre- and
                                              postpartum care and
                                              vaginal delivery.
59409.............  Vaginal delivery.......  ...........................
59410.............  Vaginal delivery with    ...........................
                     post-delivery care.
59414.............  Vaginal delivery of      ...........................
                     placenta.
59425.............  Pre-delivery care 4-6    ...........................
                     visits.
59426.............  Pre-delivery care 7 or   ...........................
                     more visits.
59510.............  CESAREAN DELIVERY......  Cesarean delivery with pre-
                                              and post-delivery care.
59514.............  Cesarean delivery......  ...........................
59515.............  Cesarean delivery with   ...........................
                     post-delivery care.
59610.............  VBAC DELIVERY..........  Vaginal delivery after
                                              prior cesarean delivery.
59612.............  Vaginal delivery after   ...........................
                     prior cesarean
                     delivery.
59614.............  Vaginal delivery after   ...........................
                     prior cesarean
                     delivery with post-
                     delivery care.
62322.............  SPINAL INJECTION FOR     Injection of substance into
                     PAIN MANAGEMENT.         spinal canal of lower back
                                              or sacrum using imaging
                                              guidance.
62323.............  Injection of substance   ...........................
                     into spinal canal of
                     lower back or sacrum
                     using imaging guidance.
63030.............  LOW BACK DISK SURGERY..  Surgical procedure to
                                              decompress a herniated
                                              vertebra.
64483.............  Transforaminal Epidural  Injections of anesthetic
                     Injection.               and/or steroid drug into
                                              lower or sacral spine
                                              nerve root using imaging
                                              guidance.
64493.............  INJ PARAVERT F JNT L/S   Injection into lower back
                     1 LEV.                   of nerve block using
                                              imaging guidance.
64721.............  CARPAL TUNNEL SURGERY..  Release of the transverse
                                              carpal ligament.
66821.............  YAG capusulotomy         Removal of recurring
                     surgery.                 cataract in lens capsule
                                              using laser.
66984.............  CATARACT SURG W/IOL 1    Removal of cataract with
                     STAGE.                   insertion of lens.
67028.............  INJECTION EYE DRUG.....  Injection of a
                                              pharmaceutical agent into
                                              the eye.
69210.............  REMOVE IMPACTED EAR WAX  Removal of ear wax from one
                                              or both ears.
69436.............  CREATE EARDRUM OPENING.  Insertion of tubes into one
                                              or both ears.
70450.............  CT HEAD/BRAIN W/O DYE..  CT scan head or brain
                                              without dye.
70486.............  CT MAXILLOFACIAL W/O     CT Scan of the face and jaw
                     DYE.                     without dye.
70491.............  CT SOFT TISSUE NECK W/   CT scan of neck with dye.
                     DYE.
70551.............  MRI BRAIN STEM W/O DYE.  MRI of brain stem without
                                              dye.
70553.............  MRI BRAIN STEM W/O & W/  MRI scan of brain before
                     DYE.                     and after contrast.
71045.............  CHEST X-RAY............  Single view.
71046.............  CHEST X-RAY............  2 views, front and back.
71047.............  CHEST X-RAY............  3 views.
71048.............  CHEST X-RAY............  4 or more views.
71101.............  X-RAY EXAM UNILAT RIBS/  Radiologic examination of
                     CHEST.                   one side of the chest/
                                              ribs.
71250.............  CT THORAX W/O DYE......  CT scan of the thorax
                                              without dye.
71260.............  CT THORAX W/DYE........  CT scan of the thorax with
                                              dye.
71275.............  CT ANGIOGRAPHY CHEST...  Diagnostic Radiology
                                              (Diagnostic Imaging)
                                              Procedures of the Chest.
72040.............  X-RAY EXAM NECK SPINE 2- Radiologic examination of
                     3 VW.                    the neck/spine, 2-3 views.
72050.............  X-RAY EXAM NECK SPINE 4/ Radiologic examination of
                     5VWS.                    the neck/spine, 4-5 views.
72070.............  X-RAY EXAM THORAC SPINE  Radiologic examination of
                     2VWS.                    the middle spine, 2 views.
72072.............  X-RAY EXAM THORAC SPINE  Radiologic examination of
                     3VWS.                    the middle spine, 3 views.
72100.............  X-RAY EXAM L-S SPINE 2/  X-ray of the lower spine 2-
                     3 VWS.                   3 views.
72110.............  X-RAY EXAM L-2 SPINE 4/  X-ray of lower and sacral
                     >VWS.                    spine, minimum of 4 views.
72131.............  CT LUMBAR SPINE W/O DYE  CT scan of lower spine
                                              without dye.
72141.............  MRI NECK SPINE W/O DYE.  MRI of the neck or spine
                                              without dye.
72146.............  MRI CHEST SPINE W/O DYE  MRI of chest and spine
                                              without dye.

[[Page 72185]]

 
72148.............  MRI LUMBAR SPINE W/O     MRI scan of lower spinal
                     DYE.                     canal.
72156.............  MRI NECK SPINE W/O & W/  MRI of neck/spine with and
                     DYE.                     without dye.
72157.............  MRI CHEST SPINE W/O & W/ MRI of chest and spine with
                     DYE.                     and without dye.
72158.............  MRI LUMBAR SPINE W/O &   MRI of lower back with and
                     W/DYE.                   without dye.
72170.............  X-RAY EXAM OF PELVIS...  Radiologic examination of
                                              the pelvis.
72192.............  CT PELVIS W/O DYE......  CT of pelvis without dye.
72193.............  CT PELVIS W/DYE........  CT scan, pelvis, with
                                              contrast.
72195.............  MRI PELVIS W/O DYE.....  MRI of pelvis without dye.
72197.............  MRI PELVIS W/O & W/DYE.  MRI of pelvis before and
                                              after dye.
73000.............  X-RAY EXAM OF COLLAR     Radiologic examination of
                     BONE.                    the collar bone.
73030.............  X-RAY EXAM OF SHOULDER.  Radiologic examination of
                                              the shoulder.
73070.............  X-RAY EXAM OF ELBOW....  Radiologic examination,
                                              elbow; 2 views.
73080.............  X-RAY EXAM OF ELBOW....  Radiologic examination,
                                              elbow; 3 or more views.
73090.............  X-RAY EXAM OF FOREARM..  Radiologic examination of
                                              the forearm.
73100.............  X-RAY EXAM OF WRIST....  3 or more views.
73110.............  X-RAY EXAM OF WRIST....  Up to 3 views.
73120.............  X-RAY EXAM OF HAND.....  X-ray of the hand with 2
                                              views.
73130.............  X-RAY EXAM OF HAND.....  X-ray of the hand with 3 or
                                              more views.
73140.............  X-RAY EXAM OF FINGER(S)  Radiologic examination of
                                              the finger(s).
73221.............  MRI JOINT UPR EXTREM W/  MRI of upper extremity
                     O DYE.                   without dye.
73560.............  X-RAY EXAM OF KNEE 1 OR  Radiologic examination of
                     2.                       the knee with 1 or 2
                                              views.
73562.............  X-RAY EXAM OF KNEE 3...  Radiologic examination of
                                              the knee with 3 views.
73564.............  X-RAY EXAM KNEE 4 OR     Radiologic examination of
                     MORE.                    the knee with 4 or more
                                              views.
73565.............  X-RAY EXAM OF KNEES....  Radiologic examination of
                                              both knees.
73590.............  X-RAY EXAM OF LOWER LEG  Radiologic examination of
                                              the lower leg.
73600.............  X-RAY EXAM OF ANKLE....  Radiologic examination of
                                              the ankle with 2 views.
73610.............  X-RAY EXAM OF ANKLE....  Radiologic examination of
                                              the ankle with 3 views.
73620.............  X-RAY EXAM OF FOOT.....  Radiologic examination,
                                              foot; 2 views.
73630.............  X-RAY EXAM OF FOOT.....  Radiologic examination of
                                              the foot with 3 or more
                                              views.
73650.............  X-RAY EXAM OF HEEL.....  Radiologic examination of
                                              the heel.
73660.............  X-RAY EXAM OF TOE(S)...  Radiologic examination of
                                              the toe(s).
73700.............  CT LOWER EXTREMITY W/O   CT scan of leg without dye.
                     DYE.
73718.............  MRI LOWER EXTREMITY W/O  MRI of leg without dye.
                     DYE.
73721.............  MRI JNT OF LWR EXTRE W/  MRI of lower extremity
                     O DYE.                   joint (knee/ankle) without
                                              dye.
73722.............  MRI JOINT OF LWR EXTR W/ MRI of lower extremity
                     DYE.                     joint (knee/ankle) with
                                              dye.
73723.............  MRI JOINT LWR EXTR W/    MRI of lower extremity
                     O&W/DYE.                 joint (knee/ankle) with
                                              and without dye.
74022.............  X-RAY EXAM SERIES        Serial radiologic
                     ABDOMEN.                 examination of the
                                              abdomen.
74150.............  CT ABDOMEN W/O DYE.....  CT of abdomen without dye.
74160.............  CT ABDOMEN W/DYE.......  CT of abdomen with dye.
74170.............  CT ABDOMEN W/O & W/DYE.  CT of abdomen with and
                                              without dye.
74176.............  CT ABD & PELVIS W/O      CT of abdomen and pelvis
                     CONTRAST.                without dye.
74177.............  CT ABD & PELV W/         CT scan of abdomen and
                     CONTRAST.                pelvis with contrast.
74178.............  CT ABD & PELV 1/> REGNS  Computed tomography,
                                              abdomen and pelvis;
                                              without contrast material
                                              in one or both body
                                              regions, followed by
                                              contrast material(s) and
                                              further sections in one or
                                              both body regions.
74181.............  MRI ABDOMEN W/O DYE....  MRI of abdomen without dye.
74183.............  MRI ABDOMEN W/O & W/DYE  MRI of abdomen without and
                                              with dye.
76000.............  CHEST X-RAY............  Flouroscopy, or x-ray
                                              ``movie'' that takes less
                                              than an hour.
76001.............  CHEST X-RAY............  Flouroscopy, or x-ray
                                              ``movie'' that takes more
                                              than an hour.
76512.............  OPHTH US B W/NON-QUANT   Ultrasound of the eye.
                     A.
76514.............  ECHO EXAM OF EYE         A diagnostic procedure that
                     THICKNESS.               allows a provider to see
                                              the organs and other
                                              structures in the abdomen.
76536.............  US EXAM OF HEAD AND      Ultrasound of head and
                     NECK.                    neck.
76642.............  ULTRASOUND BREAST        Limited ultrasound of the
                     LIMITED.                 breast.
76700.............  US EXAM ABDOM COMPLETE.  Ultrasound of abdomen with
                                              all areas scanned.
76705.............  ECHO EXAM OF ABDOMEN...  A diagnostic procedure that
                                              allows a provider to see
                                              the organs and other
                                              structures in the abdomen.
76770.............  US EXAM ABDO BACK WALL   Ultrasound of back wall of
                     COMP.                    the abdomen with all areas
                                              viewed.
76775.............  US EXAM ABDO BACK WALL   Ultrasound of back wall of
                     LIM.                     the abdomen with limited
                                              areas viewed.
76801.............  OB US < 14 WKS SINGLE    Abdominal ultrasound of
                     FETUS.                   pregnant uterus (less than
                                              14 weeks) single or first
                                              fetus.
76805.............  OB US >/= 14 WKS SNGL    Abdominal ultrasound of
                     FETUS.                   pregnant uterus (greater
                                              or equal to 14 weeks 0
                                              days) single or first
                                              fetus.
76811.............  OB US DETAILED SNGL      Ultrasound of single fetus.
                     FETUS.
76813.............  OB US NUCHAL MEAS 1      Evaluation through
                     GEST.                    measurement of fetal
                                              nuchal translucency.
76815.............  OB US LIMITED FETUS(S).  Ultrasound of fetus with
                                              limited views.
76817.............  TRANSVAGINAL US          Transvaginal ultrasound of
                     OBSTETRIC.               uterus.
76818.............  FETAL BIOPHYS PROFILE W/ Fetal biophysical profile
                     NST.                     with non-stress test.
76819.............  FETAL BIOPHYS PROFIL W/  Fetal biophysical profile
                     O NST.                   without non-stress test.
76830.............  TRANSVAGINAL US NON-OB.  Ultrasound of the pelvis
                                              through vagina.
76831.............  ECHO EXAM UTERUS.......  A diagnostic procedure that
                                              allows a provider to see
                                              the uterus.
76856.............  US EXAM PELVIC COMPLETE  Complete ultrasound of the
                                              pelvis.

[[Page 72186]]

 
76857.............  US EXAM PELVIC LIMITED.  Limited ultrasound of the
                                              pelvis.
76870.............  US EXAM SCROTUM........  Ultrasound of the scrotum.
76872.............  US TRANSRECTAL.........  Transrectal ultrasound.
76882.............  US LMTD JT/NONVASC XTR   Diagnostic ultrasound of an
                     STRUX.                   extremity excluding the
                                              bone, joints or vessels.
77047.............  MRI BOTH BREASTS.......  Magnetic resonance imaging,
                                              breasts, without contrast
                                              material; bilateral.
77065.............  DX MAMMO INCL CAD UNI..  Mammography of one breast.
77066.............  DX MAMMO INCL CAD BI...  Mammography of both
                                              breasts.
77067.............  SCR MAMMO BI INCL CAD..  Mammography of both breasts-
                                              2 or more views.
77080.............  BONE DENSITY STUDY OF    Scan to measure bone
                     SPINE OR PELVIS.         mineral density (BMD) at
                                              the spine and hip.
77385.............  Ntsty modul rad tx dlvr  Radiation therapy delivery.
                     smpl.
77386.............  Ntsty modul rad tx dlvr  Radiation therapy delivery.
                     cplx.
77387.............  Guidance for radia tx    Guidance for localization
                     dlvr.                    of target delivery of
                                              radiation treatment
                                              delivery.
77412.............  Radiation treatment      Radiation treatment
                     delivery.                delivery.
78014.............  THYROID IMAGING W/BLOOD  Scan using a radioactive
                     FLOW.                    medication
                                              (radiopharmaceutical) to
                                              take pictures or images of
                                              the thyroid gland.
78306.............  BONE IMAGING WHOLE BODY  A procedure most commonly
                                              ordered to detect areas of
                                              abnormal bone growth due
                                              to fractures, tumors,
                                              infection, or other bone
                                              issues.
78452.............  HT MUSCLE IMAGE SPECT    Image of the heart to
                     MULT.                    assess perfusion.
78815.............  PET IMAGE W/CT SKULL-    Tumor imaging, positron
                     THIGH.                   emission tomography (PET)
                                              with concurrently acquired
                                              computed tomography (CT)
                                              for attenuation correction
                                              and anatomical
                                              localization.
80048.............  METABOLIC PANEL TOTAL    Basic metabolic panel.
                     CA.
80050.............  GENERAL HEALTH PANEL...  General health panel.
80051.............  Blood test panel for     .
                     electrolytes (sodium
                     potassium, chloride,
                     carbon dioxide).
80053.............  COMPREHEN METABOLIC      Blood test, comprehensive
                     PANEL.                   group of blood chemicals.
80055.............  OBSTETRIC PANEL........  Obstetric blood test panel.
80061.............  LIPID PANEL............  Blood test, lipids
                                              (cholesterol and
                                              triglycerides).
80069.............  RENAL FUNCTION PANEL...  Kidney function panel test.
80074.............  ACUTE HEPATITIS PANEL..  Acute hepatitis panel.
80076.............  HEPATIC FUNCTION PANEL.  Liver function blood test
                                              panel.
80081.............  Blood test panel for     .
                     obstetrics (cbc,
                     differential wbc
                     count, hepatitis b,
                     hiv, rubella,
                     syphilis, antibody
                     screening, rbc, blood
                     typing).
80197.............  ASSAY OF TACROLIMUS....  Test is used to measure the
                                              amount of the drug in the
                                              blood to determine whether
                                              the concentration has
                                              reached a therapeutic
                                              level and is below the
                                              toxic level.
80307.............  Drug test prsmv chem     Testing for presence of
                     anlyzr.                  drug.
81000.............  URINALYSIS NONAUTO W/    Manual urinalysis test with
                     SCOPE.                   examination using
                                              microscope.
81001.............  URINALYSIS; MANUAL OR    Manual urinalysis test with
                     AUTO WITH OR WITHOUT     examination with or
                     MICROSCOPY.              without using microscope.
81002.............  URINALYSIS NONAUTO W/O   Manual urinalysis test with
                     SCOPE.                   examination without using
                                              microscope.
81003.............  URINALYSIS; MANUAL OR    Automated urinalysis test.
                     AUTO WITH OR WITHOUT
                     MICROSCOPY.
81025.............  URINE PREGNANCY TEST...  Urine pregnancy test.
82043.............  UR ALBUMIN QUANTITATIVE  Urine test to measure
                                              albumin.
82044.............  UR ALBUMIN               Urine test to measure
                     SEMIQUANTITATIVE.        albumin-semiquantitative.
82248.............  BILIRUBIN DIRECT.......  Measurement of direct
                                              bilirubin.
82306.............  VITAMIN D 25 HYDROXY...  Blood test to monitor
                                              vitamin D levels.
82553.............  CREATINE MB FRACTION...  Blood test to detect heart
                                              enzymes.
82570.............  ASSAY OF URINE           Test to measure creatinine
                     CREATININE.              in the urine.
82607.............  VITAMIN B-12...........  Blood test to measure B-12.
82627.............  DEHYDROEPIANDROSTERONE.  Blood test to measure an
                                              enzyme in the blood.
82670.............  ASSAY OF ESTRADIOL.....  Blood test to measure a
                                              type of estrogen in the
                                              blood.
82728.............  ASSAY OF FERRITIN......  Test to determine level of
                                              iron in the blood.
82784.............  ASSAY IGA/IGD/IGG/IGM    Test to determine levels of
                     EACH.                    immunoglobulins in the
                                              blood.
82803.............  BLOOD GASES ANY          Test to measure arterial
                     COMBINATION.             blood gases.
82947.............  ASSAY GLUCOSE BLOOD      Quantitative measure of
                     QUANT.                   glucose build up in the
                                              blood over time.
82950.............  GLUCOSE TEST...........  Test of glucose level in
                                              the blood.
82951.............  GLUCOSE TOLERANCE TEST.  Test to predict likelihood
                                              of gestational diabetes.
83001.............  ASSAY OF GONADOTROPIN    Test of hormone in the
                     (FSH).                   blood.
83002.............  ASSAY OF GONADOTROPIN    Test of hormone in the
                     (LH).                    blood.
83013.............  H PYLORI (C-13) BREATH.  Test of breath for a
                                              stomach bacterium.
83036.............  GLYCOSYLATED HEMOGLOBIN  Blood test to measure
                     TEST.                    average blood glucose
                                              levels for past 2-3
                                              months.
83516.............  IMMUNOASSAY NONANTIBODY  Chemical test of the blood
                                              to measure presence or
                                              concentration of a
                                              substance in the blood.
83540.............  ASSAY OF IRON..........  Blood test to measure the
                                              amount of iron that is in
                                              transit in the body.
83550.............  IRON BINDING TEST......  Blood test that measures
                                              the amount of iron carried
                                              in the blood.
83655.............  ASSAY OF LEAD..........  Blood test to determine the
                                              concentration of lead in
                                              the blood.
83718.............  ASSAY OF LIPOPROTEIN...  Blood test to measure the
                                              level of lipoproteins in
                                              the blood.
83880.............  ASSAY OF NATRIURETIC     Blood test used to diagnose
                     PEPTIDE.                 heart failure.

[[Page 72187]]

 
84134.............  ASSAY OF PREALBUMIN....  Blood test to measure level
                                              of prealbumin.
84153.............  ASSAY OF PSA TOTAL.....  PSA (prostate specific
                                              antigen).
84154.............  PSA (prostate specific   .
                     antigen) measurement.
84436.............  ASSAY OF TOTAL           Blood test to measure a
                     THYROXINE.               type of thyroid hormone.
84439.............  ASSAY OF FREE THYROXINE  Blood test to evaluate
                                              thyroid function.
84443.............  ASSAY THYROID STIM       Blood test, thyroid
                     HORMONE.                 stimulating hormone (TSH).
84460.............  ALANINE AMINO (ALT)      Blood test to evaluate
                     (SGPT).                  liver function.
84480.............  ASSAY TRIIODOTHYRONINE   Blood test to evaluate
                     (T3).                    thyroid function.
84484.............  ASSAY OF TROPONIN QUANT  Blood test to measure a
                                              certain protein in the
                                              blood to determine heart
                                              muscle damage.
84703.............  CHORIONIC GONADOTROPIN   Blood test to assess for
                     ASSAY.                   pregnancy.
85007.............  BL SMEAR W/DIFF WBC      Blood test to assess for
                     COUNT.                   infection.
85018.............  HEMOGLOBIN.............  Blood test to measure
                                              levels of hemoglobin.
85025.............  COMPLETE CBC W/AUTO      Complete blood cell count,
                     DIFF WBC.                with differential white
                                              blood cells, automated.
85027.............  COMPLETE CBC AUTOMATED.  Complete blood count,
                                              automated.
85610.............  PROTHROMBIN TIME.......  Blood test, clotting time.
85730.............  THROMBOPLASTIN TIME      Coagulation assessment
                     PARTIAL.                 blood test.
86039.............  ANTINUCLEAR ANTIBODIES   Blood test to determine
                     (ANA).                   autoimmune disorders.
86147.............  CARDIOLIPIN ANTIBODY EA  Blood test to determine
                     IG.                      cause of inappropriate
                                              blood clot formation.
86200.............  CCP ANTIBODY...........  Blood test to diagnose
                                              rheumatoid arthritis.
86300.............  IMMUNOASSAY TUMOR CA 15- Blood test to monitor
                     3.                       breast cancer.
86304.............  IMMUNOASSAY TUMOR CA     Blood test to monitor for
                     125.                     cancer.
86336.............  INHIBIN A..............  Blood test to monitor for
                                              cancer in the ovaries or
                                              testis.
86592.............  SYPHILIS TEST NON-TREP   Blood test to screen for
                     QUAL.                    syphilis.
86644.............  CMV ANTIBODY...........  Blood test to monitor for
                                              cytomegalovirus.
86665.............  EPSTEIN-BARR CAPSID VCA  Blood test to diagnose
                                              mononucleosis.
86677.............  HELICOBACTER PYLORI      Blood test to if peptic
                     ANTIBODY.                ulcers are caused by a
                                              certain bacterium.
86703.............  HIV-1/HIV-2 1 RESULT     Blood test to diagnose HIV.
                     ANTBDY.
86704.............  HEP B CORE ANTIBODY      Blood test indicating
                     TOTAL.                   infection with Hepatitis
                                              B.
86708.............  HEPATITIS A ANTIBODY...  Blood test indicating
                                              infection with Hepatitis
                                              A.
86762.............  RUBELLA ANTIBODY.......  Blood test to determine if
                                              antibodies exist for
                                              rubella.
86765.............  RUBEOLA ANTIBODY.......  Blood test to determine if
                                              antibodies exist for
                                              measles.
86780.............  TREPONEMA PALLIDUM.....  Blood test to determine
                                              existence of certain
                                              bacterium that causes
                                              syphilis.
86803.............  HEPATITIS C AB TEST....  Blood test to determine
                                              infection with Hepatitis
                                              C.
86850.............  RBC ANTIBODY SCREEN....  Blood test to screen for
                                              antibodies that could harm
                                              red blood cells.
87040.............  BLOOD CULTURE FOR        Blood test to screen for
                     BACTERIA.                bacteria in the blood.
87046.............  STOOL CULTR AEROBIC      Blood test to identify
                     BACT EA.                 bacteria that may be
                                              contributing to symptoms
                                              in the gastrointestinal
                                              tract.
87070.............  CULTURE OTHR SPECIMN     Test of body fluid other
                     AEROBIC.                 than blood to assess for
                                              bacteria.
87077.............  CULTURE AEROBIC          Test of a wound for type of
                     IDENTIFY.                bacterial infection.
87081.............  CULTURE SCREEN ONLY....  Medical test to find an
                                              infection.
87086.............  URINE CULTURE/COLONY     Culture of the urine to
                     COUNT.                   determine number of
                                              bacteria.
87088.............  URINE BACTERIA CULTURE.  Culture of the urine to
                                              determine bacterial
                                              infection.
87101.............  SKIN FUNGI CULTURE.....  A procedure used to
                                              determine if fungi are
                                              present in an area of the
                                              body.
87186.............  MICROBE SUSCEPTIBLE MIC  A test used to determine
                                              which medications work on
                                              bacteria for fungi.
87205.............  SMEAR GRAM STAIN.......  A lab test used to detect
                                              bacteria or fungi in a
                                              sample taken from the site
                                              of a suspected infection.
87210.............  SMEAR WET MOUNT SALINE/  A lab test to screen for
                     INK.                     evidence of vaginal
                                              infection.
87324.............  CLOSTRIDIUM AG IA......  A test of the stool to
                                              diagnose Clostridium
                                              difficile (C. diff)
                                              infection.
87389.............  HIV-1 AG W/HIV-1 & HIV-  Test for HIV.
                     2 AB.
87491.............  CHYLMD TRACH DNA AMP     Test that detects
                     PROBE.                   Chlamydia.
87510.............  GARDNER VAG DNA DIR      Blood test for vaginitis.
                     PROBE.
87591.............  N.GONORRHOEAE DNA AMP    Blood test for an STD.
                     PROB.
87624.............  Hpv high-risk types....  Detection test for human
                                              papillomavirus (hpv).
87653.............  STREP B DNA AMP PROBE..  Blood test for strep
                                              infection.
87661.............  TRICHOMONAS VAGINALIS    Blood test for an STD.
                     AMPLIF.
87801.............  DETECT AGNT MULT DNA     Blood test to determine
                     AMPLI.                   genetic material of
                                              certain infectious agents.
87804.............  INFLUENZA ASSAY W/OPTIC  Flu test.
87807.............  RSV ASSAY W/OPTIC......  Test for RSV.
87880.............  STREP A ASSAY W/OPTIC..  Test for strep A.
88112.............  CYTOPATH CELL ENHANCE    Urine test.
                     TECH.
88141.............  CYTOPATH C/V INTERPRET.  Cervical cancer screening
                                              test with interpretation.
88142.............  CYTOPATH C/V THIN LAYER  PAP smear.
88150.............  CYTOPATH C/V MANUAL....  Cervical cancer screening
                                              test done manually.
88175.............  CYTOPATH C/V AUTO FLUID  PAP smear.
                     REDO.
88305.............  TISSUE EXAM BY           Test of tissues for
                     PATHOLOGIST.             diagnosis of
                                              abnormalities.
88312.............  SPECIAL STAINS GROUP 1.  Blood test to assist with
                                              diagnosis.
88313.............  SPECIAL STAINS GROUP 2.  Blood test to assist with
                                              diagnosis.
88342.............  IMMUNOHISTO ANTB 1ST     Pathology test.
                     STAIN.
90460.............  IM ADMIN 1ST/ONLY        Immunization administration
                     COMPONENT.               in children <18.
90471.............  IMMUNIZATION ADMIN.....  Immunization administration
                                              by a medical assistant or
                                              nurse.

[[Page 72188]]

 
90474.............  IMMUNE ADMIN ORAL/NASAL  Immunization administered
                     ADDL.                    orally or nasally.
90632.............  HEPA VACCINE ADULT IM..  Hepatitis A vaccination for
                                              adults.
90633.............  HEPA VACC PED/ADOL 2     Hepatitis A vaccination for
                     DOSE IM.                 adolescents and children.
90649.............  4VHPV VACCINE 3 DOSE IM  3-dose HPV vaccination.
90656.............  IIV3 VACC NO PRSV 0.5    Flu shot-high dose for 2019-
                     ML IM.                   2020 flu season given by
                                              injection.
90658.............  IIV3 VACCINE SPLT 0.5    Preservative free flu
                     ML IM.                   vaccine.
90672.............  LAIV4 VACCINE            Nasal flu vaccine.
                     INTRANASAL.
90681.............  RV1 VACC 2 DOSE LIVE     Rotavirus vaccination.
                     ORAL.
90686.............  IIV4 VACC NO PRSV 0.5    Flu shot-high dose for 2019-
                     ML IM.                   2020 flu season given by
                                              injection for people >65.
90707.............  MMR VACCINE SC.........  Measles, mumps, and rubella
                                              vaccine.
90710.............  MMRV VACCINE SC........  Measles, mumps, rubella,
                                              and varicella vaccine.
90715.............  TDAP VACCINE 7 YRS/> IM  Diphtheria, tetanus
                                              acellular, and pertussis
                                              vaccine for adults.
90716.............  VAR VACCINE LIVE SUBQ..  Varicella vaccine.
90732.............  PPSV23 VACC 2 YRS+ SUBQ/ pneumococcal vaccine.
                     IM.
90734.............  MENACWYD/MENACWYCRM      meningococcal conjugate
                     VACC IM.                 vaccine.
90736.............  HZV VACCINE LIVE SUBQ..  Shingles vaccine.
90746.............  HEPB VACCINE 3 DOSE      Hepatitis B vaccine.
                     ADULT IM.
90791.............  PSYCH DIAGNOSTIC         A diagnostic tool employed
                     EVALUATION.              by a psychiatrist to
                                              diagnose problems with
                                              memory, thought processes,
                                              and behaviors.
90792.............  PSYCH DIAG EVAL W/MED    A diagnostic tool employed
                     SRVCS.                   by a psychiatrist to
                                              determine if medications
                                              are needed.
90832.............  PSYTX W PT 30 MINUTES..  Psychotherapy, 30 min.
90833.............  PSYTX W PT W E/M 30 MIN  Psychotherapy, 30 minutes
                                              with patient when
                                              performed with an
                                              evaluation and management
                                              service.
90834.............  PSYTX W PT 45 MINUTES..  Psychotherapy, 45 min.
90836.............  PSYTX W PT W E/M 45 MIN  Psychotherapy, 45 minutes
                                              with patient when
                                              performed with an
                                              evaluation and management
                                              service.
90837.............  PSYTX W PT 60 MINUTES..  Psychotherapy, 60 min.
90838.............  Psychotherapy, 60        ...........................
                     minutes.
90839.............  Psychotherapy for        ...........................
                     crisis, first 60
                     minutes.
90840.............  Psychotherapy for        ...........................
                     crisis.
90846.............  Family psychotherapy,    Family psychotherapy, not
                     50 minutes.              including patient, 50 min.
90847.............  FAMILY PSYTX W/PT 50     Family psychotherapy,
                     MIN.                     including patient, 50 min.
90853.............  GROUP PSYCHOTHERAPY....  Group psychotherapy.
92002.............  EYE EXAM NEW PATIENT...  Intermediate exam.
92004.............  EYE EXAM NEW PATIENT...  Complete exam.
92012.............  EYE EXAM ESTABLISH       Eye exam on an established
                     PATIENT.                 patient.
92014.............  EYE EXAM&TX ESTAB PT 1/  Eye exam and treatment for
                     >VST.                    established patient.
92083.............  VISUAL FIELD             An eye examination that can
                     EXAMINATION(S).          detect dysfunction in
                                              central and peripheral
                                              vision.
92133.............  CMPTR OPHTH IMG OPTIC    Optic nerve imaging.
                     NERVE.
92507.............  SPEECH/HEARING THERAPY.  Therapy for speech or
                                              hearing.
92523.............  SPEECH SOUND LANG        Evaluation of speech sound
                     COMPREHEN.               production with evaluation
                                              of language comprehension.
92552.............  PURE TONE AUDIOMETRY     Type of hearing test.
                     AIR.
93000.............  ELECTROCARDIOGRAM        Routine EKG using at least
                     COMPLETE.                12 leads including
                                              interpretation and report.
93015.............  CARDIOVASCULAR STRESS    Test to determine heart
                     TEST.                    abnormalities.
93303.............  ECHO TRANSTHORACIC.....  Test to screen the heart
                                              for abnormalities.
93306.............  Tte w/doppler complete.  Ultrasound examination of
                                              heart including color-
                                              depicted blood flow rate,
                                              direction, and valve
                                              function.
93307.............  TTE W/O DOPPLER          Echo without doppler study.
                     COMPLETE.
93320.............  DOPPLER ECHO EXAM HEART  Echo with doppler.
93350.............  STRESS TTE ONLY........  Stress test with
                                              echocardiogram.
93452.............  Cardiac Catheterization  Insertion of catheter into
                                              left heart for diagnosis.
93798.............  CARDIAC REHAB/MONITOR..  Use of EKG to monitor
                                              cardiac rehabilitation.
93880.............  EXTRACRANIAL BILAT       Study of vessels on both
                     STUDY.                   sides of the head and
                                              neck.
93922.............  UPR/L XTREMITY ART 2     Limited bilateral
                     LEVELS.                  noninvasive physiologic
                                              studies of upper or lower
                                              extremity arteries.
93970.............  EXTREMITY STUDY........  Complete bilateral study of
                                              the extremities.
93971.............  EXTREMITY STUDY........  One sided or limited
                                              bilateral study.
94010.............  BREATHING CAPACITY TEST  Test to determine how well
                                              oxygen moves from the
                                              lungs to the blood stream.
94060.............  EVALUATION OF WHEEZING.  Test to determine if
                                              wheezing is present.
94375.............  RESPIRATORY FLOW VOLUME  Graphical representation of
                     LOOP.                    inspiration and
                                              expiration.
94726.............  PULM FUNCT TST           Measures how much air is in
                     PLETHYSMOGRAP.           the lungs after taking a
                                              deep breath.
94727.............  PULM FUNCTION TEST BY    Measure of lung function
                     GAS.                     and gas exchange.
94729.............  CO/MEMBANE DIFFUSE       Test to measure how well
                     CAPACITY.                gases diffuse across lung
                                              surfaces.
95004.............  PERCUT ALLERGY SKIN      Allergy test.
                     TESTS.
95115.............  IMMUNOTHERAPY ONE        Allergy shot-1 shot.
                     INJECTION.
95117.............  IMMUNOTHERAPY            Multiple allergy shots.
                     INJECTIONS.
95810.............  POLYSOM 6/> YRS 4/>      Sleep monitoring of patient
                     PARAM.                   (6 years or older) in
                                              sleep lab.

[[Page 72189]]

 
95811.............  POLYSOM 6/>YRS CPAP 4/>  Sleep monitoring of patient
                     PARM.                    (6 years or older) in
                                              sleep lab using CPAP.
95860.............  MUSCLE TEST ONE LIMB...  Test to measure electrical
                                              activity of muscles or
                                              nerves in 1 limb.
95861.............  MUSCLE TEST 2 LIMBS....  Test to measure electrical
                                              activity of muscles or
                                              nerves in 2 limb.
95886.............  MUSC TEST DONE W/N TEST  Test to assess for nerve
                     COMP.                    damage.
96110.............  DEVELOPMENTAL SCREEN W/  Childhood test to screen
                     SCORE.                   for developmental
                                              disabilities.
96365.............  THER/PROPH/DIAG IV INF   Intravenous infusion, for
                     INIT.                    therapy, prophylaxis, or
                                              diagnosis-initial
                                              infusion.
96366.............  THER/PROPH/DIAG IV INF   Intravenous infusion, for
                     ADDON.                   therapy, prophylaxis, or
                                              diagnosis-additional
                                              infusions.
96374.............  THER/PROPH/DIAG INJ IV   Intravenous infusion, for
                     PUSH.                    therapy, prophylaxis, or
                                              diagnosis-IV push.
96375.............  TX/PRO/DX INJ NEW DRUG   Intravenous infusion, for
                     ADDON.                   treatment, prophylaxis, or
                                              diagnosis-new drug add on.
96376.............  TX/PRO/DX INJ SAME DRUG  Intravenous infusion, for
                     ADON.                    treatment, prophylaxis, or
                                              diagnosis-same drug add
                                              on.
96415.............  CHEMO IV INFUSION ADDL   Chemotherapy infusion-each
                     HR.                      additional hour.
96417.............  CHEMO IV INFUS EACH      Chemotherapy infusion-
                     ADDL SEQ.                additional IV pushes of
                                              the same medication.
97010.............  HOT OR COLD PACKS        Use of external hot or cold
                     THERAPY.                 packs.
97012.............  MECHANICAL TRACTION      Form of decompression
                     THERAPY.                 therapy of the spine.
97014.............  ELECTRIC STIMULATION     One time use unattended.
                     THERAPY.
97016.............  VASOPNEUMATIC DEVICE     Machines designed to pump
                     THERAPY.                 cold water into an
                                              inflatable wrap or brace,
                                              compressing the enveloped
                                              area of the body.
97026.............  INFRARED THERAPY.......  Light-based method to treat
                                              pain and inflammation.
97032.............  ELECTRICAL STIMULATION.  Repeated application to one
                                              or more parts of the body.
97033.............  ELECTRIC CURRENT         Psychiatric treatment in
                     THERAPY.                 which seizures are
                                              electrically induced in
                                              patients to provide relief
                                              from mental disorders.
97035.............  ULTRASOUND THERAPY.....  Use of sound waves to treat
                                              medical problems,
                                              especially musculoskeletal
                                              problems like inflammation
                                              from injuries.
97110.............  THERAPEUTIC EXERCISES..  Therapeutic exercise to
                                              develop strength,
                                              endurance, range of
                                              motion, and flexibility,
                                              each 15 minutes.
97112.............  NEUROMUSCULAR            A technique used by
                     REEDUCATION.             physical therapists to
                                              restore normal body
                                              movement patterns.
97113.............  AQUATIC THERAPY/         Use of water for therapy/
                     EXERCISES.               exercises.
97116.............  GAIT TRAINING THERAPY..  A type of physical therapy.
97124.............  MASSAGE THERAPY........  Use of massage.
97140.............  MANUAL THERAPY 1/>       Manipulation of 1 or more
                     REGIONS.                 regions of the body.
97530.............  THERAPEUTIC ACTIVITIES.  Incorporates the use of
                                              multiple parameters, such
                                              as balance, strength, and
                                              range of motion, for a
                                              functional activity.
97535.............  SELF CARE MNGMENT        Occupational therapy.
                     TRAINING.
97597.............  RMVL DEVITAL TIS 20 CM/  Debridement (for example,
                     <.                       high pressure waterjet
                                              with/without suction,
                                              sharp selective
                                              debridement with scissors,
                                              scalpel, and forceps).
97811.............  ACUPUNCT W/O STIMUL      Acupuncture without
                     ADDL 15M.                stimulation.
97813.............  ACUPUNCT W/STIMUL 15     Acupuncture with
                     MIN.                     stimulation.
98940.............  CHIROPRACT MANJ 1-2      Chiropractic manipulation
                     REGIONS.                 in 1-2 regions.
98941.............  CHIROPRACT MANJ 3-4      Chiropractic manipulation
                     REGIONS.                 in 3-4 regions.
98943.............  CHIROPRACT MANJ          Chiropractic manipulation
                     XTRSPINL 1/>.            not of the spine.
98966.............  Hc pro phone call 5-10   Telephone assessment and
                     min.                     management service, 5-10
                                              minutes of medical
                                              discussion.
98967.............  Hc pro phone call 11-20  Telephone assessment and
                     min.                     management service, 11-20
                                              minutes of medical
                                              discussion.
98968.............  Hc pro phone call 21-30  Telephone assessment and
                     min.                     management service, 21-30
                                              minutes of medical
                                              discussion.
98970.............  Qualified non physician  Qualified non physician
                     health care              health care professional
                     professional online      online digital assessment
                     digital assessment and   and management, for an
                     management est.          established patient, for
                     patient 5-10 minutes.    up to 7 days, cumulative
                                              time during the 7 days; 5-
                                              10 minutes.
98971.............  Qualified non physician  Qualified non physician
                     health care              health care professional
                     professional online      online digital assessment
                     digital assessment and   and management, for an
                     management est.          established patient, for
                     patient 11-20 minutes.   up to 7 days, cumulative
                                              time during the 7 days; 11-
                                              20 minutes.
98972.............  Qualified non physician  Qualified non physician
                     health care              health care professional
                     professional online      online digital assessment
                     digital assessment and   and management, for an
                     management for est.      established patient, for
                     patients 21+ minutes.    up to 7 days, cumulative
                                              time during the 7 days; 21
                                              or more minutes.
99051.............  MED SERV EVE/WKEND/      Medical service during off-
                     HOLIDAY.                 hours.
99173.............  VISUAL ACUITY SCREEN...  Eye test.
99201.............  OFFICE/OUTPATIENT VISIT  New patient office or other
                     NEW.                     outpatient visit,
                                              typically 10 minutes.
99202.............  OFFICE/OUTPATIENT VISIT  New patient office or other
                     NEW.                     outpatient visit,
                                              typically 20 minutes.
99203.............  OFFICE/OUTPATIENT VISIT  New patient office or other
                     NEW.                     outpatient visit,
                                              typically 30 min.
99204.............  OFFICE/OUTPATIENT VISIT  New patient office of other
                     NEW.                     outpatient visit,
                                              typically 45 min.
99205.............  OFFICE/OUTPATIENT VISIT  New patient office of other
                     NEW.                     outpatient visit,
                                              typically 60 min.
99211.............  OFFICE/OUTPATIENT VISIT  Outpatient visit of
                     EST.                     established patient not
                                              requiring a physician.
99212.............  OFFICE/OUTPATIENT VISIT  Outpatient visit of
                     EST.                     established patient
                                              requiring a physician.
99213.............  OFFICE/OUTPATIENT VISIT  Established patient office
                     EST.                     or other outpatient visit,
                                              typically 15 minutes.
99214.............  OFFICE/OUTPATIENT VISIT  Established patient office
                     EST.                     or other outpatient visit,
                                              typically 25 minutes.
99215.............  OFFICE/OUTPATIENT VISIT  Established patient office
                     EST.                     or other outpatient, visit
                                              typically 40 minutes.
99243.............  OFFICE CONSULTATION....  Patient office
                                              consultation, typically 40
                                              min.

[[Page 72190]]

 
99244.............  OFFICE CONSULTATION....  Patient office
                                              consultation, typically 60
                                              min.
99283.............  Emergency dept visit...  Emergency department visit,
                                              moderately severe problem.
99284.............  Emergency dept visit...  Emergency department visit,
                                              problem of high severity.
99285.............  Emergency dept visit...  Emergency department visit,
                                              problem with significant
                                              threat to life or
                                              function.
99381.............  INIT PM E/M NEW PAT      Initial visit for an
                     INFANT.                  infant.
99382.............  INIT PM E/M NEW PAT 1-4  Initial visit for new
                     YRS.                     patients 1-4 years old.
99383.............  PREV VISIT NEW AGE 5-11  New preventative visit in
                                              new patients 5-11 years
                                              old.
99384.............  PREV VISIT NEW AGE 12-   New preventative visit in
                     17.                      new patients 12-17 years
                                              old.
99385.............  PREV VISIT NEW AGE 18-   Initial new patient
                     39.                      preventive medicine
                                              evaluation (18-39 years).
99386.............  PREV VISIT NEW AGE 40-   Initial new patient
                     64.                      preventive medicine
                                              evaluation (40-64 years).
99387.............  INIT PM E/M NEW PAT 65+  Initial visit for new
                     YRS.                     patients 65 and older
                                              years old.
99391.............  PER PM REEVAL EST PAT    Periodic primary re-
                     INFANT.                  evaluation for an
                                              established infant
                                              patient.
99392.............  PREV VISIT EST AGE 1-4.  Initial visit for new
                                              patients 1-4 years old.
99393.............  PREV VISIT EST AGE 5-11  New preventative visit in
                                              new patients 5-11 years
                                              old.
99394.............  PREV VISIT EST AGE 12-   New preventative visit in
                     17.                      new patients 12-17 years
                                              old.
99395.............  PREV VISIT EST AGE 18-   Established patient
                     39.                      periodic preventive
                                              medicine examination age
                                              18-39 years.
99396.............  PREV VISIT EST AGE 40-   Established patient
                     64.                      periodic preventive
                                              medicine examination age
                                              40-64 years.
99397.............  PER PM REEVAL EST PAT    Periodic primary re-
                     65+ YR.                  evaluation for an
                                              established patient 65 and
                                              older.
99421.............  ONLINE DIGITAL           Online digital evaluation
                     EVALUATION AND           and management service,
                     MANAGEMENT SERVICE; 5-   for an established
                     10 MINUTES.              patient, for up to 7 days,
                                              cumulative time during the
                                              7 days; 5-10 minutes.
99422.............  Online digital           Online digital evaluation
                     evaluation and           and management service,
                     management service; 11-  for an established
                     20 minutes.              patient, for up to 7 days,
                                              cumulative time during the
                                              7 days; 11-20 minutes.
99441.............  Phone e/m phys/qhp 5-10  Physician telephone patient
                     min.                     service, 5-10 minutes of
                                              medical discussion.
99442.............  Phone e/m phys/qhp 11-   Physician telephone patient
                     20 min.                  service, 11-20 minutes of
                                              medical discussion.
99443.............  Phone e/m phys/qhp 21-   Physician telephone patient
                     30 min.                  service, 21-30 minutes of
                                              medical discussion.
------------------------------------------------------------------------

As outlined above, below are the five codes that appear on the 
commenter list of recommended items and services that are not being 
required for the initial list of 500 items and services.

------------------------------------------------------------------------
         Commenter codes not used                Reason for removal
------------------------------------------------------------------------
10022....................................  Code Retired.
11100....................................  Code Retired.
11101....................................  Code Retired.
77059....................................  Code Retired.
A288.....................................  Code Retired.
------------------------------------------------------------------------

    The Departments understand that plans and issuers may use different 
billing codes (for example, MS-DRGs vs. APR DRGs). Therefore, in the 
first year of the implementation of the self-service tool, when plans 
and issuers are required to provide cost estimates for the 500 items 
and services identified by the Departments, plans and issuers are 
permitted to make appropriate code substitutions as necessary to allow 
them to disclose cost-sharing information for the 500 items and 
services through the self-service tool. If necessary, the Departments 
will issue future guidance regarding standards for code substitutions.
a. First Content Element: Estimated Cost-Sharing Liability
    The first content element that plans and issuers are required to 
disclose under the final rules is an estimate of the cost-sharing 
liability for the furnishing of a covered item or service by a 
particular provider or providers. The calculation of the cost-sharing 
liability estimate is required to be computed based on the other 
relevant cost-sharing information that plans and issuers are required 
to disclose, as described later in this section of this preamble.
    The proposed rules defined ``cost-sharing liability'' as the amount 
a participant, beneficiary, or enrollee is responsible for paying for a 
covered item or service under the terms of the plan or coverage. The 
disclosure must include all applicable forms of cost sharing, including 
deductibles, coinsurance requirements, and copayments. The term cost-
sharing liability does not include premiums, any applicable balance 
billing amounts charged by out-of-network providers, or the cost of 
non-covered items or services. For QHPs offered through Exchanges, an 
estimate of cost-sharing liability for a requested covered item or 
service provided must reflect any cost-sharing reductions the 
individual would receive under the coverage.
    Many commenters supported the disclosure of cost-sharing liability 
for a particular item or service. One stated that providing cost-
sharing amounts to consumers in advance of receiving a service would 
likely make it easier for providers to collect consumers' cost-sharing 
amounts. However, some commenters were concerned that information 
provided in advance of care would not provide an accurate estimate of 
actual participant, beneficiary, or enrollee liability, which would 
lead to consumer confusion and frustration. A few commenters requested 
that the tool include additional information, such as all providers 
expected to be involved in providing an item or service, and the price 
of items and services historically provided along with that particular 
item or service by the provider. Some commenters urged the Departments 
to ensure appropriate educational information is provided to patients 
to help them better understand and navigate the information being 
displayed. Others recommended a federally funded and coordinated 
outreach and education campaign to encourage the use of price 
transparency tools and help patients understand the complexities of 
health care prices. One commenter urged the Departments to clarify 
that, to the extent that the actual services provided are consistent 
with those provided under the estimate, plans would not be permitted to 
hold an enrollee responsible for more than what was provided under the 
estimate.
    The Departments underscore that the estimates required by the final 
rules are

[[Page 72191]]

not required to reflect the actual or final cost of a particular item 
or service. Unforeseen factors during the course of treatment (which 
may involve additional services or providers) can result in higher 
actual cost-sharing liability following receipt of care than the 
estimate provided in advance. Nonetheless, the Departments are 
finalizing the requirement that cost-sharing liability estimates be 
built upon accurate information, including the relevant cost-sharing 
information described in 26 CFR 54.9815-2715A2(b)(1)(ii)-(iv), 29 CFR 
2590.715-2715A2(b)(1)(ii)-(iv), and 45 CFR 147.211(b)(1)(ii)-(iv). 
However, this requirement does not mean that the estimates must reflect 
the amount ultimately charged to a participant, beneficiary, or 
enrollee. Instead, the estimate should reflect the amount a 
participant, beneficiary, or enrollee would be expected to pay for the 
covered item or service for which cost-sharing information is sought. 
Thus, the final rules do not require the cost-sharing liability 
estimate to include costs for unanticipated items or services the 
individual could incur due to the severity of his or her illness or 
injury, provider treatment decisions, or other unforeseen events. 
Attendant notice requirements in 26 CFR 54.9815-2715A2(b)(1)(vii), 29 
CFR 2590.715-2715A2(b)(1)(vii), and 45 CFR 147.211(b)(1)(vii) also 
require inclusion of a statement that actual charges for the 
participant's, beneficiary's, or enrollee's covered items and services 
may be different from those described in a cost-sharing liability 
estimate, depending on the actual items and services received at the 
point of care.
    Additionally, while the Departments acknowledge the value of not 
allowing group health plans and health insurance issuers to impose 
higher cost sharing than estimated, to the extent that the actual 
services provided were consistent with those provided under the 
estimate, the Departments are of the view that it would not be prudent 
to hold plans and issuers liable to the exact estimate that is provided 
through the tool, as cost-sharing obligations may ultimately vary from 
the estimates provided in advance. Additionally, the Departments are 
concerned that such a requirement could incentivize plans and issuers 
to provide high estimates, rather than the most accurate estimates.
    Commenters recommended the final rules provide plans and issuers 
with the flexibility to apply a reasonable methodology for estimating 
reliable out-of-pocket costs for a specific network provider, and 
recommended that this methodology could include, but should not be 
limited to, using current year negotiated rates, historical negotiated 
rates, historical claims, or a combination of these data points. One 
commenter urged the Departments to remove the proposed requirement that 
cost-sharing liability information be calculated based on negotiated 
rates, stating that this is not the methodology used by most existing 
cost-estimate tools.
    The Departments understand that plans and issuers with existing 
cost-estimate tools may use advanced analytics in calculating cost-
sharing liability estimates. However, the Departments are of the view 
that the most accurate estimates of cost-sharing liability should be 
provided using the actual rates and fees upon which liability is 
determined. It is the Departments' understanding that, while provider 
reimbursement may be based on negotiated rates, plans and issuers do 
not always calculate a consumer's liability using the negotiated rate 
as defined in paragraph (a) of the proposed rules, such as in 
capitation arrangements where the provider is reimbursed 
retrospectively. Rather, some plans and issuers may determine a 
participant's, beneficiary's, or enrollee's cost-sharing liability on a 
contractually agreed upon underlying fee schedule between the provider 
and the plan or issuer.
    Therefore, the final rules require that cost-sharing liability for 
a particular item or service be calculated based on in-network rates, 
out-of-network allowed amounts, and individual-specific accumulators, 
such as deductibles and out-of-pocket limits. However, the Departments 
clarify that plans and issuers may incorporate additional metrics and 
analytics beyond this minimum standard: For example, by using complex 
historical analytics to predict total costs of items and services 
available through a bundled payment arrangement. The Departments will 
assess how additional useful information can be provided to consumers 
in this area going forward.
    Under the proposed rules, plans and issuers would be required to 
provide participants, beneficiaries, and enrollees with cost-sharing 
information for either a discrete item or service or for items or 
services for a treatment or procedure for which the plan uses a bundled 
payment arrangement, according to how the plan or issuer structures 
payment for the item or service. Several commenters pointed out that 
providing cost-sharing liability estimates for bundled payment 
arrangements might introduce confusion as consumers may not realize 
that billing and payment rates are different when items and services 
are rendered individually versus as part of a bundled item or service. 
Commenters stated that ultimately, patients would very likely receive 
inaccurate or misleading estimates in a significant proportion of self-
service estimate requests. Similarly, several commenters sought 
clarification regarding how plans and issuers that incorporate 
innovative and cost-saving methods like reference-based pricing, value-
based insurance design, and direct primary care as part of their 
services and plan designs would comply with the requirements of the 
proposed rules.
    The Departments recognize the variability in pricing structures and 
plan designs for many plans and issuers. The Departments understand 
that developers have demonstrated that formulas for unique pricing 
models are already being incorporated into existing estimator tools. 
The Departments further understand that while providing cost estimates 
in advance for a plan or issuer that incorporates reference-based 
reimbursement may be complex, it is still feasible to estimate such 
costs. For example, plans or issuers could develop a method for 
analyzing past claims of specific providers to look for patterns in 
their payment rates from which to derive an accurate predictive 
estimate in advance. In response to the Hospital Price Transparency 
final rule, one hospital claims to have developed a tool that provides 
cost estimates with 95 percent to 99 percent accuracy.\110\ While some 
factors associated with the course of care are incorporated after 
services are rendered, others, like gender or location, are known in 
advance. Therefore, the Departments expect plans and issuers to provide 
a reasonable estimate using information the plan or issuer knows about 
the participant, beneficiary, or enrollee or the average participant, 
beneficiary, or enrollee.
---------------------------------------------------------------------------

    \110\ Meyer, H. ``Hospitals roll out online price estimators as 
CMS presses for transparency.'' Modern Healthcare. June 23, 2018. 
Available at https://www.modernhealthcare.com/article/20180623/NEWS/180629994/hospitals-roll-out-online-price-estimators-as-cms-presses-for-transparency.
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    The Departments again acknowledge that how a provider is reimbursed 
does not necessarily indicate how a participant, beneficiary, or 
enrollee will be billed. Specifically, as commenters explained, the 
bundled payment arrangement as defined in the proposed rules may not 
reflect the cost-sharing liability for which the consumer is liable. 
For instance, if a provider is reimbursed in a bundled payment 
arrangement for a surgical procedure that includes the surgery and pre- 
and post-surgery office visits, but the

[[Page 72192]]

enrollee is billed a copayment for each office visit and coinsurance 
for the surgical procedure, the enrollee should be able to obtain the 
separate copayment liabilities for each of the office visits and the 
surgical procedures, not one bundled charge. However, under this 
example, if the individual is only responsible for one copayment that 
includes all office visits and the surgical procedures, the plan or 
issuer could provide the cost-sharing liability estimate for that 
bundled payment arrangement.
    Therefore, the final rules clarify that plans and issuers should 
provide one overall cost-sharing liability estimate for a bundled 
payment arrangement if that is the only cost sharing for which the 
participant, beneficiary, or enrollee would be liable. However, if a 
plan or issuer reimburses a provider under a bundled payment 
arrangement for all covered items and services provided for a specific 
treatment or procedure, but cost sharing is imposed separately for each 
unique item and service included in the bundled payment, plans and 
issuers should disclose the cost-sharing liability for those distinct 
items and services to the participant, beneficiary, or enrollee. The 
Departments also recognize that providing one estimate that includes 
all items and services that are typically provided within an episode of 
care may be consumer-friendly in some situations, even where the items 
and services are not subject to a bundled payment arrangement. 
Therefore, the final rules clarify that while plans and issuers are not 
required to provide bundled estimates where the provider is not 
reimbursed through a bundled payment arrangement, nothing prohibits 
plans or issuers from providing bundled estimates in situations where 
such estimates could be relevant to participants, beneficiaries, or 
enrollees, as long as the plan or issuer also discloses information 
about the relevant items or services individually, as required by the 
final rules.
    Plans and issuers should take a similar approach for plan designs 
that incorporate alternative payment structures such as direct primary 
care or other bundled or capitated payment arrangements. The 
Departments understand that there are many unique plan designs and may 
issue additional guidance to address specific questions from plans, 
issuers, and enforcement entities regarding the requirements of the 
final rules.
    The Departments appreciate comments requesting education and 
outreach to help ensure that participants, beneficiaries, and enrollees 
know that these consumer tools exist and can understand the information 
displayed. The Departments recognize that more than 94 percent of plans 
and issuers recently surveyed already have some variation of an 
internet self-service tool,\111\ yet another study noted that only 12 
percent of participants, beneficiaries, or enrollees currently use the 
tools available to them,\112\ which might suggest that there is an 
opportunity for improved awareness and understanding of these tools. 
However, the Departments are also of the view that plans and issuers 
have their own incentives to provide quality customer service and know 
what types of outreach and messaging would be most helpful to their 
participants, beneficiaries, and enrollees. Therefore, the Departments 
have decided not to institute specific outreach and education 
requirements, but rather strongly encourage plans and issuers to 
develop educational and outreach materials to promote awareness that 
self-service tools exist, where to find them on the plan's or issuer's 
website, how to use the tool, what, if any, further innovations above 
the baseline standards that differentiates their tool from competitors, 
and what additional information may be available. In addition, the 
Departments are of the view that employers may want to conduct outreach 
and education to encourage their employees to shop for lower-priced 
services that may slow increases in employer-sponsored coverage 
premiums.
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    \111\ Sharma A., Manning, R., and Mozenter, Z. ``Estimating the 
Burden of the Proposed Transparency in Coverage Rule.'' Bates White 
Economic Consulting. January 27, 2020. Available at: https://www.bateswhite.com/newsroom-insight-Transparency-in-Coverage-Rule.html.
    \112\ See Mehrotra, A., Chernew, M., and Sinaiko, A. ``Promises 
and Reality of Price Transparency.'' April 5, 2018. 14 N. Eng. J. 
Med. 378. Available at: https://www.nejm.org/doi/full/10.1056/NEJMhpr1715229.
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    One commenter stated that the final rules should provide the 
flexibility for health plans to display cost-sharing information either 
as dollars or using some proxy variable that either conveys costs 
relative to other providers or the cost-effectiveness of the providers 
for a given items or service relative to their peers. Another commenter 
recommended that cost estimates include both an average price and a 
reasonable range of the possible prices that the treatment could cost. 
Other commenters recommended the Departments allow cost estimates to be 
provided as a range.
    The Departments are of the view that cost-sharing averages and 
ranges would not provide personalized and specific cost-sharing 
information and therefore the final rules adopt, as proposed, the 
provision that estimated cost-sharing liability be reflected as a 
dollar amount. However, the Departments understand that providing an 
estimated range could help consumers understand how their costs may 
vary depending on the complexity of a procedure. In addition to 
providing a cost-sharing estimate that is specific to the participant, 
beneficiary, or enrollee, plans and issuers may also choose to provide 
low and high ranges of what the consumer may expect to pay to reflect 
other needed services, complications, and other factors.
    Several commenters expressed concerns about the ability of plans 
and issuers to provide these cost-sharing estimates, noting that few, 
if any, currently provide this level of disclosure to participants, 
beneficiaries, or enrollees before the incurrence of a claim. 
Commenters stated that most major issuers have treatment cost 
estimators available, but these tools are rudimentary and are not 
necessarily available for all plan designs. Commenters also stated that 
few regional issuers currently make any cost-estimation data available 
and the vast majority of data provided via online tools currently 
relies on estimated costs drawn from publicly available sources rather 
than personal information and circumstances.
    Another commenter stated that most self-insured group health plans 
do not have easy access to all the data necessary to provide 
beneficiaries with what they described as upfront adjudication of the 
beneficiary's claim, like an EOB. One commenter expressed concern, 
stating that plans could be subject to significant penalties for 
failure to comply and highlighted that self-insured plans typically do 
not establish their own networks, but rather contract with an issuer, 
TPA or other entity for the use of their network. Another commenter 
stated that issuers, preferred provider networks, and TPAs continue to 
maintain network pricing information as confidential and proprietary, 
even with respect to their own plan clients. Some commenters stated 
that while the preamble to the proposed rules suggests that plans could 
renegotiate their contracts in order to gain access to this proprietary 
information, this ignores the realities of the market. These commenters 
opined that, in the absence of clearer guidance applicable to issuers 
and TPAs, plans and issuers will be burdened with trying to force 
disclosure of this information.
    The Departments are of the view that the ability to access cost-
sharing liability information in advance of

[[Page 72193]]

seeking care should not be limited by the participant's, beneficiary's, 
or enrollee's plan or issuer type. The Departments are aware of several 
issuers that provide advance cost estimates that are based on an 
individual's specific information, such as out-of-pocket amount 
accumulators. The intent of the final rules is to make this information 
available to a larger number of participants, beneficiaries, and 
enrollees, empowering them to shop for care that best meets their 
needs.
    Additionally, while the Departments recognize that some self-
insured group health plans (or TPAs acting on their behalf) may not 
currently have access to the information that would be required to 
calculate a participant's or beneficiary's cost liability, the 
Departments do not foresee any barriers that would prohibit the plan or 
TPA from obtaining this information. As discussed in the preamble to 
the proposed rules, plans may have to amend existing contracts with 
issuers, TPAs, or providers. Consistent with the discussion of legal 
authority elsewhere in this preamble, even if a contract between a 
self-insured plan and a TPA contains a provision prohibiting the public 
disclosure of its terms, it is the Departments' understanding that such 
contracts typically include exceptions where a particular disclosure is 
required by Federal law, and Federal law would control over contractual 
terms in any case.
    In response to whether other types of information are necessary to 
provide an estimate of cost-sharing liability prior to an individual's 
receipt of items or services from a provider(s), one commenter 
suggested--in order to enhance the usability and accuracy of these 
data--that CMS and payers utilize the open-source episode grouper 
maintained by the not-for-profit Patient-Centered Episode System 
(PACES) Center, to create a single industry standard for defining 
clinical episodes of care using current medical record and payment 
systems and based on consensus across multiple stakeholders including 
providers, payers, purchasers, and consumers.
    While the Departments generally support standardization across the 
complex health care ecosystem, there is no current required 
standardization of items and services provided for certain common 
episodes of care. Because of the lack of this particular standard, 
requiring plans and issuers to use PACES or similar services to 
determine costs will not accurately reflect what different plans and 
issuers actually reimburse for different episodes of care.
    The Departments acknowledge that section 2713 of the PHS Act 
requires non-grandfathered group health plans and issuers offering non-
grandfathered coverage in the individual or group markets to provide 
coverage without the imposition of any cost-sharing requirements for 
select preventive items and services. However, if the same items or 
services are furnished for non-preventive purposes, the participant, 
beneficiary, or enrollee may be subject to the cost-sharing terms of 
his or her plan. The Departments are of the view that if an item or 
service will be furnished at no cost to the participant, beneficiary, 
or enrollee, the participant, beneficiary, or enrollee should know this 
information. One commenter expressed a desire that price transparency 
not serve as a disincentive for individuals seeking preventive and 
maintenance therapy services. The Departments are of the view that 
clearly indicating when items and services have a $0 cost-sharing 
liability may have the opposite effect--it may actually encourage 
consumers to seek preventive care. The Departments understand that 
determining whether an item or service is preventive or not for an 
individual may be complex, and, indeed, may be impossible prior to 
service. Therefore, to the extent an item or service is a recommended 
preventive service under section 2713 of the PHS Act, and the plan or 
issuer cannot determine whether the request is for preventive or non-
preventive purposes, the plan or issuer must display the non-preventive 
cost-sharing liability in the internet-based self-service tool, along 
with a statement that the item or service may not be subject to cost 
sharing if it is billed as a preventive service. For example, if an 
individual requests cost-sharing information for an in-network 
colonoscopy, the plan should display the applicable cost-sharing 
information for a diagnostic colonoscopy and a statement that the 
service may not be subject to cost sharing if it is billed as a 
preventive service from an in-network provider. As an alternative, a 
plan or issuer may allow an individual to request cost-sharing 
information for the specific preventive or non-preventive item or 
service by including the appropriate terms such as ``preventive,'' 
``non-preventive,'' or ``diagnostic'' as a means to request the most 
accurate cost-sharing information.
b. Second Content Element: Accumulated Amounts
    The second content element is a participant's, beneficiary's, or 
enrollee's accumulated amounts. The proposed rules defined 
``accumulated amounts'' as the amount of financial responsibility that 
a participant, beneficiary, or enrollee has incurred at the time the 
request for cost-sharing information is made, with respect to a 
deductible and/or an out-of-pocket limit. If an individual is enrolled 
in other than self-only coverage, these accumulated amounts would 
include the financial responsibility a participant, beneficiary, or 
enrollee has incurred toward meeting his or her individual deductible 
and/or out-of-pocket limit, as well as the amount of financial 
responsibility that the individuals enrolled under the plan or coverage 
have incurred toward meeting the other than self-only coverage 
deductible and/or out-of-pocket limit, as applicable. The Departments 
interpret section 2707(b) of the PHS Act as requiring non-grandfathered 
group health plans to comply with the maximum out-of-pocket limit 
promulgated under section 1302(c)(1) of PPACA, including the HHS 
clarification that the self-only maximum out-of-pocket limit applies to 
each individual, regardless of whether the individual is enrolled in 
self-only coverage or in other than self-only coverage. Accordingly, 
the self-only maximum out-of-pocket limit applies to an individual who 
is enrolled in family coverage or other coverage that is not self-only 
coverage under a group health plan.\113\ For this purpose, the 
Departments proposed that accumulated amounts would include any expense 
that counts toward the deductible or out-of-pocket limit (such as 
copayments and coinsurance), but would exclude expenses that would not 
count toward a deductible or out-of-pocket limit (such as premium 
payments, out-of-pocket expenses for out-of-network services, or 
amounts for items or services not covered under a plan or coverage).
---------------------------------------------------------------------------

    \113\ 80 FR 10750, 10824-10825 (Feb. 27, 2015); see also FAQs 
About Affordable Care Act Implementation (Part XXVII), Q1. Available 
at https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/ACA/-FAQs-Part-XXVII/-MOOP/-2706/-FINAL.pdf and https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/aca-part-xxvii.pdf.
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    Furthermore, to the extent a plan or issuer imposes a cumulative 
treatment limitation on a particular covered item or service (such as a 
limit on the number of items, days, units, visits, or hours covered in 
a defined time period) independent of individual medical necessity 
determinations, the accumulated amounts would also include the amount 
that has accrued toward the limit on the item or service (such as the 
number of items, days, units, visits, or hours the participant, 
beneficiary, or enrollee has used).

[[Page 72194]]

    As discussed in the proposed rules, the Departments understand that 
independent of cumulative treatment limitations, cost-sharing liability 
may vary by individual based on a determination of medical necessity 
and that it may not be reasonable for a plan or issuer to account for 
this variance as part of the accumulated amounts. Therefore, under the 
final rules, plans and issuers are required to provide cost-sharing 
information with respect to an accumulated amount for a cumulative 
treatment limitation that reflects the status of the individual's 
progress toward meeting the limitation, and this information does not 
include any individual determination of medical necessity that may 
affect coverage for the item or service. For example, if the terms of 
an individual's plan or coverage limit coverage of physical therapy to 
10 visits per plan or policy year, subject to a medical necessity 
determination, and at the time the request for cost-sharing information 
is made the individual has had claims paid for three physical therapy 
visits, the plan or coverage would make cost-sharing information 
disclosures based on the fact that the individual could be covered for 
seven more physical therapy visits in that plan or policy year, 
regardless of whether or not a determination of medical necessity for 
future visits has been made at that time.
    Several commenters supported the inclusion of the accumulated 
amounts as one of the content elements. One commenter agreed with the 
proposed requirement that the accumulated amounts include the financial 
responsibility incurred toward both an individual deductible and/or 
out-of-pocket limit and toward the other than self-only coverage 
deductible and/or out-of-pocket limit. One commenter recommended that 
plans be required to disclose to prospective enrollees whether an 
enrollee's accumulated amounts are reduced through a plan's accumulator 
adjustment program because, the commenter noted, having this 
information prior to enrollment in a plan is crucial because of the 
impact such programs have on participant, beneficiary, and enrollee 
access, adherence, and outcomes.
    The Departments agree that an essential part of providing accurate 
cost-sharing estimates is disclosing individuals' progress toward their 
accumulated amounts. However, the intent of the self-service tool is to 
provide current participants, beneficiaries, and enrollees with 
information about their plan or issuer, and, therefore, the Departments 
are not finalizing any provisions related to disclosures to potential 
enrollees. The final rules adopt this provision as proposed.
    One commenter recommended the Departments confirm amounts made 
available in account-based arrangements that can or must be used toward 
cost-sharing expenses under a separate plan need not be reflected in 
the accumulated amounts or cost-sharing estimate under the tool. The 
commenter stated that there is an array of these types of arrangements 
of varying types and structures and to incorporate them into the cost-
sharing estimate could be administratively challenging and would impose 
a significant burden.
    The Departments clarify that the estimates do not include amounts 
made available through separate account-based arrangements. In 
addition, the Departments encourage, but are not requiring, plans and 
issuers to issue a disclaimer regarding such arrangements, as 
necessary.
    Certain commenters stated that the proposed requirement to display 
accumulated amounts toward a cumulative treatment limitation on a 
particular item or service would be difficult to implement and 
requested elimination or delay of this requirement. Commenters 
expressed that in some cases, this information may be tracked by third-
party vendors and not integrated into claims systems; for example, 
plans and issuers often contract with third parties that provide 
medical benefits management for certain services (physical therapy, for 
example). Commenters stated that building the connectivity necessary to 
exchange information on accumulated amounts in real time would take 
significant time. Other commenters recommended this requirement be 
optional.
    The Departments acknowledge that disclosure of accumulated amounts 
may present challenges for plans and issuers. However, an accurate 
estimate of cost-sharing liability cannot be achieved without taking 
into account a participant's, beneficiary's, or enrollee's accumulated 
amounts, including cumulative treatment limitations. Nonetheless, to 
give plans and issuers additional time to prepare, the disclosure 
requirements related to cost-sharing liability estimates in the final 
rules are not applicable until plan years (or in the individual market, 
policy years) beginning on or after January 1, 2023, providing two 
years for implementation, which should give plans and issuers 
sufficient time to ensure that they are able to comply.
    One commenter urged the Departments to include a requirement for 
plans to provide the cost for the beneficiary to purchase a non-covered 
prescription drug and to indicate whether and, if so, to what extent, 
that cost will be applied against the deductible. The commenter stated 
that knowing to what extent a non-covered drug expense will count 
towards meeting a deductible and the annual limitation on cost sharing, 
if at all, especially with regard to specialty drugs, is critical 
because there are significant coverage gaps.
    While the Departments appreciate the suggestions related to non-
covered prescription drugs, this rulemaking is focused on covered items 
and services. The Departments are not inclined to increase the burden 
imposed by the final rules by adding requirements to disclose 
information regarding non-covered services, given that plans and 
issuers may not have access to the costs of drugs they do not cover and 
include in their formulary. The Departments will take this suggestion 
into consideration for future rulemaking.
c. Third Content Element: In-Network Rates
Negotiated Rates
    In the proposed rules, the Departments proposed to require group 
health plans and health insurance issuers to disclose the negotiated 
rate, reflected as a dollar amount, for an in-network provider or 
providers for a requested covered item or service, to the extent 
necessary to determine the participant's, beneficiary's, or enrollee's 
cost-sharing liability. Many commenters did not support the disclosure 
of negotiated rates, stating that publishing negotiated rates would not 
meet the Departments' purported goal of helping consumers understand 
costs and would possibly make purchasing more confusing and difficult 
for consumers. Additionally, some commenters expressed concerns that 
publication of negotiated rates would force plans and issuers to 
violate non-disclosure contracts with providers. Conversely, many other 
commenters did support the disclosure of negotiated rates and offered 
support for their disclosure to participants, beneficiaries, and 
enrollees. These commenters stated that consumers should be engaged and 
educated about health care spending, and as discussed in more detail 
below, several commenters supported the disclosure of negotiated rates 
even when it is not relevant to a consumer's cost-sharing liability.
    The Departments maintain that the disclosure of the negotiated 
rates is a key element of overall price transparency. Participants, 
beneficiaries,

[[Page 72195]]

and enrollees are often responsible for a percentage of the negotiated 
rate through coinsurance or the entire negotiated rate if they have not 
yet met their deductible. Consistent with discussions elsewhere in this 
preamble, the Departments are of the view that such contracts typically 
include exceptions where a particular disclosure is required by Federal 
law.
    In the preamble to the proposed rules, the Departments acknowledged 
that some provider contracts express negotiated rates as a formula (for 
example, 150 percent of the Medicare rate), but disclosure of formulas 
is not likely to be helpful or understandable for many participants, 
beneficiaries, and enrollees viewing this information. For this reason, 
the final rules require plans and issuers to disclose the negotiated 
rates and underlying fee schedules that result from using such a 
formula, as a dollar amount.
    A few commenters recommended disclosing negotiated rate ranges or 
benchmarks to help consumers compare prices among providers. One 
commenter stated it would be useful if plans disclosed their range of 
in-network rates (or their average or median rate) for each service. 
This commenter stated that, for certain services such as complex 
surgeries, for which fees may be bundled and may vary widely depending 
on the severity of a participant's, beneficiary's or enrollee's 
condition, providing the range of in-network fees may be particularly 
appropriate. This type of disclosure could alert participants, 
beneficiaries, and enrollees to consider, and prompt them to consult 
providers about, the full range of potential expenses for their care. 
Another commenter recommended that, regardless of the participant's, 
beneficiary's, or enrollee's out-of-pocket liability, the participant, 
beneficiary, or enrollee should always be provided the full in-network 
amount, as well as a comparison of that amount to a benchmark such as 
the Fair Price or median in-network price. This commenter stated that 
the in-network price for a service can vary by as much as 200 to 1,000 
percent, depending on the provider selected. In order to achieve the 
goals of transparency, consumers need to know the full price of a 
service prior to care so they are able to effectively compare 
providers' prices.
    In the Departments' view, disclosure of formulas or ranges are not 
likely to be helpful or understandable for many participants, 
beneficiaries, and enrollees viewing this information. The purpose of 
the internet-based self-service tool is to provide personalized costs 
based on the participant's, beneficiary's, or enrollee's specific plan 
or coverage, and ranges and formulas do not achieve this goal. For this 
reason, the final rules retain the proposed requirement to disclose the 
rate that results from using such a formula, which is required to be 
expressed as a dollar amount.
Underlying Fee Schedule Rate
    Given the unique nature of certain plan designs, in the proposed 
rules, the Departments requested comment on whether there were certain 
reimbursement or payment models that should be exempt from all or 
certain aspects of the proposed rules. A few commenters urged the 
Departments to clarify how capitation arrangements and value-based 
reimbursement designs, including bundled payment arrangements and 
reference-based pricing, would be regulated under the proposed rules. 
Commenters stated that provider payment amounts are not knowable under 
these types of arrangements until after care is provided and that they 
cannot be attributed to a particular item or service provided to a 
particular participant, beneficiary, or enrollee. Other commenters 
stated that participants, beneficiaries, and enrollees should have 
access to cost-sharing liability data for items and services that might 
be rendered in the course of their care, but that the Departments' 
proposed approach downplayed the complexity of payer-provider contracts 
in a way that could inadvertently lead to participants, beneficiaries, 
and enrollees receiving misleading estimates of their cost-sharing 
liability. The commenter stated that only the consumer's cost sharing 
and the fee-for-service component of reimbursement should be required 
to be disclosed under these requirements. Another commenter stated that 
the vast majority of bundled payment arrangements use a retrospective 
settlement, in which the payer and provider determine a final 
settlement after all care in the relevant episode has been delivered, 
suggesting that a negotiated rate under these arrangements could not be 
provided in advance.
    The Departments are of the view that, for transparency in coverage 
to be truly effective, consumers should have access to all pricing 
information related to their care so they can make meaningful decisions 
about their health care spending. Further, the Departments do not agree 
that the disclosure of negotiated rates will be misleading to 
participants, beneficiaries, or enrollees. Negotiated rates are already 
an element of an EOB that participants, beneficiaries, and enrollees 
are accustomed to receiving after receiving health care items or 
services. As stated elsewhere in this preamble, providing this 
information in advance equips a more cost-conscious participant, 
beneficiary, and enrollee with the necessary information to make a more 
informed decision about their health care. Furthermore, the Departments 
are of the view that it is in the best interest of plans and issuers to 
indicate, when disclosing these rates, what each rate is and how it is 
applicable to the participant's, beneficiary's, or enrollee's plan or 
coverage.
    To more fully understand the complexity of payer-provider contracts 
and, in an effort to clarify how the proposed rules would apply to 
capitated, bundled, and other alternative reimbursement designs, the 
Departments considered these public comments and conducted additional 
research to understand different contracting models and the inputs that 
would be necessary for determining a participant's, beneficiary's, or 
enrollee's cost-sharing liability under these models.
    Under some capitation arrangements, payers reimburse a provider a 
set amount per participant, beneficiary, or enrollee for a pre-defined 
amount of time, regardless of whether the participant, beneficiary, or 
enrollee uses the provider's services. Capitation payments are 
generally guided by actuarial principles and may be determined by 
different factors, such as a participant's, beneficiary's, or 
enrollee's age and gender. For instance, under some capitated models, 
plans and issuers pay a provider or a collective panel of providers a 
per-member-per-month (PMPM) capitation amount, which is the negotiated 
rate. It is the Departments' understanding that under certain capitated 
and bundled payment arrangements, providers' payments may be reconciled 
retrospectively to account for utilization, value adjustments, or other 
weighting factors that can affect the final payment to a provider. The 
Departments understand that capitation arrangements also may include at 
least one underlying fee schedule rate upon which a participant's, 
beneficiary's, or enrollee's cost-sharing liability is determined.
    As the Departments acknowledged earlier in this preamble, 
negotiated rates, as defined in the final rules, do not always affect a 
participant's, beneficiary's, or enrollee's cost-sharing liability. To 
account for alternative reimbursement arrangements such as capitated 
and bundled payment arrangements, the Departments are renaming the 
third content element as ``in-network rates,'' comprised of the

[[Page 72196]]

following elements, as applicable to the plan's or issuer's payment 
model: negotiated rate and underlying fee schedule rate, reflected as 
dollar amounts. Plans and issuers must disclose the underlying fee 
schedule rate used to determine participant, beneficiary, or enrollee 
cost-sharing liability only where that rate is different from the 
negotiated rate. As discussed earlier in this preamble, the final rules 
require that the cost-sharing liability estimate for a requested 
covered item or service be calculated using the current underlying fee 
schedule rate if the plan or issuer uses such a fee schedule. The 
Departments are of the view that disclosing underlying fee schedule 
rates will provide the most relevant data on which cost sharing is 
based, if cost sharing is not based on the negotiated rate, as 
originally proposed.
Disclosing the Negotiated Rate and Underlying Fee Schedule Rate
    In the proposed rules, the Departments acknowledged that if the 
negotiated rate does not impact an individual's cost-sharing liability 
under a plan or coverage for a covered item or service (for example, if 
the copayment for the item or service is a flat dollar amount or zero 
dollars and the individual has met a deductible, or a deductible does 
not apply to that particular item or service), disclosure of the 
negotiated rate may be unnecessary to calculate cost-sharing liability 
for that item or service. Therefore, the Departments proposed that 
disclosure of a negotiated rate would not be required if it is not 
relevant for calculating an individual's cost-sharing liability for a 
particular item or service. The Departments sought comment on whether 
there are any reasons disclosure of negotiated rates should nonetheless 
be required under these circumstances.
    Many commenters agreed that negotiated rates should only be 
disclosed to the extent they are used for determining cost-sharing 
liability. Commenters further expressed that only information 
meaningful to consumers' cost-sharing liability should be required to 
be disclosed. One commenter stated that this interpretation should be 
extended to payments tied to value, such as ``shared savings,'' 
bonuses, and other performance-based reimbursements.
    Conversely, as stated earlier, many commenters supported the 
disclosure of negotiated rates in all circumstances. One commenter 
stated that disclosing the amount of the negotiated rate is extremely 
valuable regardless of whether the disclosure of this information 
impacts a participant's cost-sharing liability, because it will 
illuminate the costs of these particular items and services--reflecting 
the benefit consumers receive from their enrollment in the plan or 
coverage, as well as helping them to be conscious of the costs incurred 
by the plan overall. This commenter pointed out that if the plan or 
issuer has different negotiated in-network rates with different 
providers furnishing the same item or service, participants, 
beneficiaries, and enrollees will have the opportunity to compare the 
different rates among the different providers.
    Another commenter suggested a number of benefits that could come 
from the disclosure of negotiated rates through the cost-sharing tool, 
even in cases in which that information is not relevant to the specific 
cost-sharing inquiry. The commenter pointed out that even if the 
participant's, beneficiary's, or enrollee's cost is not affected, the 
plan's or issuer's cost could be significantly affected and that 
allowing participants, beneficiaries, and enrollees awareness and 
visibility of negotiated rates could provide consumers with a greater 
understanding of health care costs and enable participants, 
beneficiaries, and enrollees to seek out lower cost providers. The 
commenter further stated that although participants, beneficiaries, and 
enrollees will use the tool to look up estimated cost-sharing for 
specific items and services, often they will also expect to seek 
services from the same provider repeatedly (for example, for ongoing 
treatment and follow-up care).
    The Departments agree with those commenters who favored requiring 
disclosure of negotiated rates even when the negotiated rate is not 
relevant to determining cost sharing, because it may promote awareness 
and understanding of health care prices and promotes transparency in 
coverage. Accordingly, the phrase ``to the extent relevant to the 
participant's or beneficiary's cost-sharing liability'' that appeared 
in paragraph (b)(1) of the proposed regulations has been removed from 
the final rules. The final rules modify the third content element to 
require that the negotiated rate always be disclosed with cost-sharing 
liability estimates, even if it is not used to determine cost sharing, 
and that the underlying fee schedule rate also be disclosed, to the 
extent that it is different from the negotiated rate, as applicable to 
the plan's payment model.
    With regard to plans and issuers using an alternative reimbursement 
model, such as a capitated or bundled payment arrangement that does not 
have negotiated rates or an underlying fee schedule, one commenter 
stated that issuers do not always have access to the negotiated rates 
or internal payment methodologies utilized by capitated medical groups 
or other providers and would not be able to reliably provide cost 
transparency based on a negotiated rate at the service level. In 
contrast, another commenter stated there is no justification for 
excluding plans that reimburse their providers based on capitation from 
the internet-based self-service tool requirements as this would result 
in an incomplete data set, and these plans already assign values to 
services to administer benefits with deductibles and coinsurance, as 
well as for risk adjustment and internal reporting purposes. Another 
commenter stated that the Departments should include Accountable Care 
Organizations (ACOs) and other capitated arrangements within the ambit 
of the final rules and should require transparency and full disclosure 
of financial incentive arrangements that underlie capitated 
arrangements under a specific plan or contract, not just a consumer's 
anticipated liability. This commenter stated that any exemptions may 
actually be incentives for plans and issuers to move toward opaque 
pricing models.
    The Departments acknowledge that it is possible that some plans and 
issuers using alternative reimbursement models may not have negotiated 
rates or underlying fee schedule rates to disclose in the internet-
based self-service tool. However, the numbers of plans and issuers 
without negotiated rates or underlying fee schedule rates is limited 
and the Departments are of the view that an exemption for such 
arrangements is not necessary. Additionally, the Departments are of the 
view that providing an exemption for such arrangements will result in 
incomplete data sets. As stated in the final rules, the in-network rate 
must be disclosed, as applicable to the plan's or issuer's payment 
model. If the plan or issuer does not have negotiated rates or 
underlying fee schedule rates, the third content element does not 
apply.
Prescription Drugs
    The final rules adopt the requirement that group health plans and 
health insurance issuers disclose to participants, beneficiaries, or 
enrollees an estimate of cost-sharing liability for each item or 
service, including prescription drugs. As discussed in the preamble to 
the proposed rules, this would allow participants, beneficiaries, and 
enrollees to request cost-sharing information for a specific billing 
code

[[Page 72197]]

(as described later in this preamble) associated with a prescription 
drug or by descriptive terms (such as the name of the prescription 
drug), which would permit participants, beneficiaries, and enrollees to 
learn the estimated cost of a prescription drug obtained directly 
through a provider, such as a pharmacy or mail order service. In 
addition to allowing participants, beneficiaries, and enrollees to 
obtain cost-sharing information by using a billing code or descriptive 
term, the proposed rules would also have permitted participants, 
beneficiaries, and enrollees to learn the cost of a set of items or 
services that include a prescription drug or drugs that is subject to a 
bundled payment arrangement for a treatment or procedure. In the 
proposed rules, the Departments acknowledged that outside of a bundled 
payment arrangement, plans and issuers often base cost-sharing 
liability for prescription drugs on the undiscounted list price, such 
as the AWP or WAC, which frequently differs from the price the plan or 
issuer has negotiated for the prescription drug.\114\ In these 
instances, providing the participant, beneficiary, or enrollee with a 
rate that has been negotiated between the issuer or plan and its PBM 
could be misleading, as this rate would reflect rebates and other 
discounts, and could be lower than what the individual would pay--
particularly if the participant, beneficiary, or enrollee has not met 
his or her deductible.
---------------------------------------------------------------------------

    \114\ ``Follow the Dollar.'' PhRMA. November 30, 2017. Available 
at: https://www.phrma.org/report/follow-the-dollar-report.
---------------------------------------------------------------------------

    The Departments sought comment as to whether a rate other than the 
negotiated rate, such as the undiscounted price, should be required to 
be disclosed for prescription drugs, and whether and how to account for 
any and all rebates, discounts, and dispensing fees to ensure 
participants, beneficiaries, and enrollees have access to meaningful 
cost-sharing liability estimates for prescription drugs.
    Several commenters supported disclosure of rebates, discounts, and 
other price concessions for drugs. One commenter referred to drug price 
concessions as one of the ``most confounding black boxes of health 
care'' and stated that data suggests these concessions are actually 
increasing out-of-pocket costs for participants, beneficiaries, and 
enrollees. This commenter urged the Departments to require plans and 
issuers to disclose the list price, the negotiated rate, a single 
dollar value reflecting the total amount of price concessions, and the 
price used to calculate the participant's, beneficiary's, and 
enrollee's coinsurance along with, if different from the negotiated 
rate, an explanation as to why the price is different from the 
negotiated rate. Another commenter opined that participants, 
beneficiaries, and enrollees have the right to know a drug's 
undiscounted price, discounted or negotiated price, and the total sum 
of all price concessions for that drug, including fees, rebates, and 
discounts. This commenter stated that providing a beneficiary with 
these three data points strikes the appropriate balance between 
improving transparency without misleading or overwhelming the 
participant, beneficiary, or enrollee.
    Many commenters suggested that plans and issuers be required to 
disclose when the participant's, beneficiary's, or enrollee's cost-
sharing requirement exceeds the price paid by the plan or issuer. One 
commenter stated that in cases where plans pass through some or all 
rebates and other price concessions to participants, beneficiaries, and 
enrollees, the prices disclosed to participants, beneficiaries, and 
enrollees should be the price net of those rebates and concessions. The 
commenter emphasized the importance of plans and issuers also 
disclosing to participants, beneficiaries, and enrollees when 
manufacturer rebates and discounts are not passed through to them at 
the point-of-sale or factored into cost-sharing. One commenter noted 
that negotiated prices for prescriptions or cash price alternatives may 
sometimes appear less expensive, but that such alternative rates (for 
example, cash price options) may increase overall costs if such rates 
offset the ability to reach a plan's deductible or out-of-pocket 
maximum thresholds. Therefore, this commenter requested that the 
Departments provide clarity as to whether plans and issuers would be 
responsible for notifying participants, beneficiaries, and enrollees of 
such considerations and/or making such calculations. Similarly, two 
commenters urged the Departments to require disclosure of the 
negotiated rate for drugs in all situations, even where the beneficiary 
owes a fixed-amount copayment, and cited reports of cases when, for 
inexpensive generics, the beneficiary's fixed-amount copay actually 
exceeded the negotiated rate.
    Three commenters recommended that the Departments provide plans the 
flexibility to display the most meaningful price to an enrollee for 
drugs. One commenter stated that if the participant, beneficiary, or 
enrollee's cost sharing is based upon a specified benchmark, the plan 
should be allowed to specify the benchmark used in the tool's 
documentation. This commenter suggested that requiring plans to conform 
to a single standard is not possible, and in effect may be unhelpful to 
consumers, given the multitude of contracts (and different contract 
terms) that each plan's PBM may have with pharmacies. Another commenter 
stated providing this flexibility will allow for issuer innovation in 
developing cost-estimator functionality that provides real-time, 
accurate, and useful prescription drug estimates to participants, 
beneficiaries, or enrollees.
    One commenter recommended the Departments consider using ``net 
price'' rather than the ``negotiated rate'' for estimating cost-sharing 
liability for prescription drugs. The commenter explained that direct 
and indirect remuneration (DIR) fees under Medicare Part D and similar 
PBM practices in the private market were originally designed to capture 
rebates and other mechanisms not included at the point-of-sale. 
However, the commenter stated that DIR fees and other retroactive fees 
utilized by PBMs are now being used beyond their original purpose to 
retroactively adjust pharmacies' payment months after the sale, 
sometimes below the price paid by the pharmacy.
    Some commenters stated that the Departments should not require 
display of negotiated drug prices, rebates, or other discounts or fees. 
Two commenters expressed that, rather than increasing transparency or 
providing actionable or meaningful information to participants, 
beneficiaries, or enrollees, estimated rebate information would simply 
confound and frustrate participants, beneficiaries, or enrollees, given 
its lack of direct relevance to the amount the participant, 
beneficiary, or enrollee is required to pay for the drug at a pharmacy. 
Another commenter stated that disclosing highly confidential dispensing 
fees would benefit only those parties being paid dispensing fees, by 
giving them a window into the dispensing fees paid to their 
competitors, and advised that the Departments should avoid requiring 
any disclosure of drug prices, rebates, discounts, or fees that would 
undermine plans' and issuers' ability to negotiate lower drug costs.
    The Departments also solicited comment as to whether there are 
scenarios in which including drug pricing information in cost estimates 
would be problematic. One commenter recommended that the final rules 
require disclosure of an estimate of the cost-sharing liability 
associated with a drug only when there is an out-of-pocket cost to the 
participant, beneficiary, or enrollee that is directly

[[Page 72198]]

attributable to the drug. Another recommended that when the price of a 
drug is not the basis of the enrollee's cost-sharing liability, plans 
should be given the option to publish the benchmark price or omit a 
price altogether, displaying only the enrollee's cost-sharing 
liability.
    The Departments also sought comment on whether the relationships 
between plans or issuers and PBMs allow plans and issuers to disclose 
rate information for drugs, or if contracts between plans and issuers 
and PBMs would need to be amended to allow plans and issuers to provide 
a sufficient level of transparency. If those contracts would need to be 
amended, the Departments sought comment on the time that would be 
needed to make those changes. While some commenters stated that the 
rates negotiated between PBMs and pharmacies are considered 
confidential, other commenters stated that existing contracts would not 
prevent PBMs or issuers from disclosing the required information. One 
commenter stated that it is common that contracts be modified in 
response to changes in a statute or regulation, and that Federal public 
policy imperatives override existing contractual provisions. This 
commenter stated the public interest in complete disclosure to reduce 
costs for consumers unquestionably outweighs any confidentiality 
provisions in current contracts that might otherwise protect disclosure 
of relevant information to the Federal Government.
    The Departments agree that participants, beneficiaries, and 
enrollees, as well as health care payers such as employers, should have 
access to meaningful pricing information related to drug pricing in 
order to meaningfully evaluate plan and issuer offerings and gain 
transparency into potential out-of-pocket costs.
    The Departments also acknowledge that contract terms may need to be 
amended based on the final rules. The Departments agree that disclosure 
of rebates, discounts, and other price concessions would further the 
goals of price transparency, but also acknowledge other commenters' 
concerns that disclosing all these elements might cause consumer 
confusion. The Departments also acknowledge that there could be value 
in using ``net price'' rather than ``negotiated rate'' and in 
disclosing when a participant's, beneficiary's, or enrollee's cost-
sharing liability exceeds the price paid by the plan or issuer. As 
described by commenters, there are numerous pricing inputs throughout 
the drug supply chain that affect the final price for the consumer--
making complete transparency on drug pricing more complex than that of 
other items and services. The Departments aim to strike a balance 
between illuminating some of the factors that drive drug costs and not 
overwhelming consumers with information that is not directly relevant 
to their cost-sharing liability. To that end, the final rules require 
plans and issuers to disclose in element (i), an individual's out-of-
pocket cost liability for prescription drugs, and in element (iii), the 
negotiated rate of the drug. As discussed elsewhere in this preamble, 
the Departments recognize that the negotiated rate might be different 
for branded and generic drugs. For instance, the negotiated rate might 
be the WAC for branded drugs and the Maximum Allowed Cost (MAC) for 
generic drugs. The Departments also acknowledge that this price might 
be established differently for different plans and issuers. The 
Departments anticipate this disclosure generally will not necessitate 
the disclosure of information on discounts, rebates, or price 
concessions for a drug.
    The Departments recognize there may be circumstances in which a 
drug carries no cost-sharing liability for a participant, beneficiary, 
or enrollee. If there is no cost sharing associated with a prescription 
drug, under the final rules, the tool should reflect a cost-sharing 
value of $0 for clarity, but the negotiated rate must be displayed.
    The proposed rules sought comment on the possibility of requiring 
access to the APIs used by pharmacies in accessing drug prices. One 
commenter stated that drug prices frequently differ from period to 
period over the course of the year, as well as across pharmacy 
locations even within the same national pharmacy chain. The commenter 
recommended that the Departments consider requiring PBMs to provide 
payers, group plans, and third parties with access to the same price 
APIs accessed by pharmacies, stating that, with access to an open API, 
the plan or third party could request the estimated price for the same 
prescription at multiple retail pharmacies and receive real-time retail 
pricing based upon the participant's, beneficiary's, or enrollee's 
plan. The Departments recognize the value in requiring cost-sharing 
information be made available through an API and will use the comments 
received to inform future rulemaking.
    Commenters requested that the Departments confirm that issuers may 
provide a link to prescription drug cost tools offered through PBMs or 
vendors to satisfy the requirement to provide pricing information for 
prescription drugs. One commenter also urged the Departments to 
prohibit the internet-based, self-service tool from being used by 
prescribers' e-prescribing and electronic medical record systems or by 
plans to steer patients to pharmacies other than a patient's pharmacy 
of choice, such as those owned wholly or partially by health plans or 
PBMs.
    The Departments agree that plans and issuers who provide 
participants', beneficiaries', or enrollees' cost-sharing liability 
estimates and negotiated rates through a standalone tool provided by a 
PBM or third-party vendor satisfy the requirements under the final 
rules. The Departments also clarify that if the PBM or other third-
party vendor fails to provide full or timely information, then the plan 
or issuer, not the PBM or third-party vendor, violates these 
transparency disclosure requirements. Regarding a prohibition on 
steering patients to certain pharmacies by plans or prescribers, the 
Departments are not finalizing any prohibitions at this time and will 
monitor the implementation of these disclosure requirements.
d. Fourth Content Element: Out-of-Network Allowed Amount
    The fourth content element is the out-of-network allowed amount for 
the requested covered item or service. In the proposed rules, the 
Departments proposed to define ``out-of-network allowed amount'' to 
mean the maximum amount a group health plan or health insurance issuer 
would pay for a covered item or service furnished by an out-of-network 
provider. Under the proposed rules, plans and issuers would be required 
to disclose an estimate of cost-sharing liability for a participant, 
beneficiary, or enrollee. Therefore, the Departments proposed that, 
when disclosing an estimate of cost-sharing liability for a covered 
item or service from an out-of-network provider, a plan or issuer would 
disclose the out-of-network allowed amount and any cost-sharing 
liability the participant, beneficiary, or enrollee would be 
responsible for paying. For example, if a plan has established an out-
of-network allowed amount of $100 for an item or service from a 
particular out-of-network provider and the participant, beneficiary, or 
enrollee is responsible for paying 30 percent of the out-of-network 
allowed amount ($30), the plan would disclose both the allowed amount 
($100) and the individual's cost-sharing liability ($30), indicating 
that the individual is responsible for 30 percent of the out-of-network 
allowed amount. Under the proposed rules, this element would only be 
relevant when a participant, beneficiary, or enrollee

[[Page 72199]]

requests cost-sharing information for a covered item or service 
furnished by an out-of-network provider.
    In the proposed rules, the Departments explained that the 
definition of cost-sharing liability does not include amounts charged 
by out-of-network providers that exceed the out-of-network allowed 
amount, which participants, beneficiaries, or enrollees must pay 
(sometimes referred to as balance bills). Therefore, it may be 
difficult for participants, beneficiaries, or enrollees to determine 
their likely out-of-pocket costs for covered items and services 
furnished by an out-of-network provider. The Departments also explained 
that the statutory language of section 1311(e)(3)(A)(vii) of PPACA and 
section 2715A of the PHS Act indicates that Congress intended that 
participants, beneficiaries, enrollees, and other members of the public 
have access to accurate and timely information regarding cost sharing 
and payments with respect to any out-of-network coverage. In the 
Departments' view, requiring plans and issuers to disclose out-of-
network allowed amounts and a participant's, beneficiary's, or 
enrollee's cost-sharing obligation for covered items and services is 
necessary and appropriate to fulfill this statutory mandate, and would 
give individuals information necessary to estimate their out-of-pocket 
costs, assuming they request additional information from an out-of-
network provider about how much the provider would charge for a 
particular item or service.
    One commenter encouraged the Departments to eliminate the proposed 
``maximum amount'' standard and to instead incorporate usual, 
customary, and reasonable (UCR) amounts as the required plan disclosure 
for out-of-network cost estimates under any final rulemaking. The 
commenter stated that the ``maximum amount'' a plan may be willing to 
pay a given provider for a service is not necessarily predetermined. 
This commenter stated that while some out-of-network providers and 
plans may participate in super-regional or national ``discount'' 
arrangements through third parties, in many cases payments to out-of-
network providers are individually negotiated. Further, while a plan 
might generally start with payment that is consistent with UCR 
calculations (with every intention of paying no more than this amount), 
other circumstances may result in negotiated increases to that 
reimbursement. As such, prospectively reporting an accurate ``maximum 
amount'' is impossible in some cases. Additionally, this commenter 
stated that because many out-of-network reimbursements, and in 
particular high-cost claims, are individually negotiated, initial 
disclosure of a plan's true maximum reimbursement, insofar as this can 
be calculated or even estimated in advance, would materially reduce a 
plan's bargaining power by notifying non-contracted providers in 
advance of the amount they are likely to secure from a plan if they 
assert all available leverage in a negotiation. To the extent 
participant, beneficiary, or enrollee cost-sharing liability is 
ultimately derived from out-of-network payment amounts, this 
requirement is likely to increase out-of-pocket costs for consumers 
when seeking care from out-of-network providers.
    Conversely, one commenter stated that while larger, for-profit, 
national health plans can afford to utilize the UCR, smaller, regional 
health plans are at a market disadvantage if they are compelled to base 
allowed amounts on the UCR, rather than negotiating on a case-by-case 
basis in a constrained market. As a result, some health plans will 
struggle to determine and provide information about maximum out-of-
network allowed amounts--a range of possible ``allowed amounts'' may be 
the most information some health plans have available.
    The Departments agree with commenters that the UCR may be a more 
accurate estimate of the amount a plan or issuer will pay an out-of-
network provider for covered items or services, if the plan relies on 
UCR to determine out-of-network rates. However, the Departments 
acknowledge that basing allowed amounts on the UCR may disadvantage 
smaller plans. The Departments also acknowledge that a plan or issuer 
may be able to provide a participant, enrollee, or beneficiary with a 
more accurate estimate of an out-of-network allowed amount by using 
calculations based on historical claims data, because the plan or 
issuer does not have a pre-determined negotiated rate with out-of-
network providers. The Departments acknowledge the concern that plans 
may lose bargaining power by disclosing out-of-network allowed amount 
to consumers; however, the Departments are of the view that the out-of-
network allowed amount is a critical element of price transparency and 
its disclosure is essential to enabling consumers to estimate their 
out-of-network costs in advance. To this end, the Departments are 
modifying this provision to require plans and issuers to disclose the 
out-of-network allowed amount or any other calculation that provides a 
more accurate estimate of the amount a plan will pay for the requested 
covered item or service, such as a UCR. Allowing plans and issuers to 
provide an amount other than the out-of-network allowed amount could 
better serve consumers with a more accurate estimate of what a plan or 
issuer may reimburse an out-of-network provider. The Departments 
clarify that if a plan or issuer chooses to use another metric that 
provides a reasonably accurate estimate of what a plan or issuer will 
pay for a covered item or service from an out-of-network provider, the 
plan or issuer must still provide a participant, beneficiary, or 
enrollee with information regarding any cost sharing the participant, 
beneficiary, or enrollee would be responsible for paying.
    Some commenters recommended the Departments not require plans and 
issuers to provide allowed amount and cost-sharing information for 
covered services furnished by an out-of-network provider. One commenter 
stated it is not possible for issuers to include allowed amounts for 
out-of-network providers because, without a provider contract, issuers 
do not have the necessary information, including provider names, 
National Provider Identifier (NPI), address, specialty, or other 
demographic information to include these providers in a price 
transparency tool. One commenter stated that providing real-time 
disclosures of allowed amounts could be challenging to the extent that 
plans and issuers determine the allowed amount for certain out-of-
network items and services based on a percentage of billed charges, as 
billed charges are unknown by the plan or issuer prior to a claim for 
health care services.
    The Departments acknowledge the challenges plans and issuers may 
face disclosing this element, but the Departments are of the view that 
information regarding out-of-network coverage is essential to the goal 
of price transparency. With regard to plans and issuers lacking the 
necessary information for providers with whom they do not contract, the 
Departments are of the view that plans and issuers should know what 
they are willing to pay for certain items and services, irrespective of 
provider. The final rules provide flexibility for plans and issuers to 
provide an estimate of what the plan will pay by allowing plans and 
issuers to disclose either the out-of-network allowed amount or another 
amount that would provide a reasonably accurate estimate of what a plan 
would reimburse an out-of-network provider for a covered item or 
service. Given that some plans and issuers determine the allowed amount 
for certain out-of-network items and services based on a percentage of 
billed charges, the final rules provide that a percentage can be

[[Page 72200]]

disclosed instead of a dollar amount, if plans and issuers reimburse 
out-of-network providers a percentage of the billed charges for a 
covered item or service.
    One commenter sought clarification that the tool is meant to 
provide cost-sharing information for out-of-network providers and not 
just the allowed amounts.
    As discussed earlier in this preamble under the first content 
element, under the final rules, the plan or issuer is required to 
disclose both the out-of-network allowed amount, as described earlier 
in this preamble, and any cost-sharing liability, based on that allowed 
amount, that the participant, beneficiary, or enrollee would be 
responsible for paying.
    One commenter stated that the Departments should not require Health 
Maintenance Organizations' (HMOs') out-of-pocket calculators to provide 
out-of-network data. The commenter noted that the proposed rules 
limited the tool to covered services, and HMOs generally do not cover 
benefits provided by out-of-network and, therefore, should not be 
required to estimate out-of-network costs.
    The Departments understand that some plans and issuers may not 
provide any reimbursement to an out-of-network provider for an 
otherwise covered item or service. Nonetheless, it is the Departments' 
understanding that some HMOs reimburse an out-of-network provider for 
covered items and services in certain circumstances and, therefore, the 
Departments expect HMOs to provide cost-sharing information with regard 
to out-of-network coverage. The Departments recognize that in many 
cases, an HMO's maximum allowed amount for an out-of-network service 
will be $0. However, the Departments are of the view that it is 
important for a participant, enrollee, or beneficiary to understand 
what the plan or issuer will or will not pay for out-of-network costs. 
Therefore, if the plan or issuer, including an HMO, does not provide 
any reimbursement for an item or service provided by an out of network 
provider, the Departments expect the plan or issuer to disclose $0 as 
the allowed amount.
e. Fifth Content Element: Items and Services Content List
    The fifth content element is a list of those covered items and 
services for which cost-sharing information is being disclosed for 
items or services subject to a bundled payment arrangement. The 
Departments proposed that this requirement would apply only when a 
participant, beneficiary, or enrollee requests cost-sharing information 
for an item or service that is subject to a bundled payment arrangement 
that includes multiple items or services. The Departments proposed 
that, in cases in which an individual requests a cost-sharing liability 
estimate for a covered item or service that is subject to a bundled 
payment arrangement, plans and issuers would be required to disclose a 
list of each covered item and service included in the bundled payment 
arrangement and the individual's cost-sharing liability for those 
covered items and services as a bundle, but not a cost-sharing 
liability estimate separately associated with each covered item or 
service included in the bundle.
    While some commenters supported the inclusion of cost-sharing 
information for bundled payment arrangements, others did not support 
requiring the disclosure of bundled payment arrangements and the items 
and services included in the arrangement. These commenters stated 
disclosure of this information would likely be unhelpful to the 
participant, beneficiary, or enrollee and might cause confusion. One 
commenter encouraged the Departments to clarify that disclosure for 
diagnostic imaging procedures in particular should be presented to 
consumers in a method that is inclusive of the combined professional 
and technical rates, or the globally billed rate.
    The Departments are of the view that understanding which items and 
services are included in a bundled payment arrangement will provide 
helpful information for participants, beneficiaries, and enrollees, so 
that they understand what items and services are accounted for in 
calculating their cost-sharing liability. The Departments are of the 
view that this list is unlikely to cause confusion. Instead, it will 
reduce confusion by clearly identifying what individual items and 
services would be covered under their estimated cost-sharing liability. 
If the plan or issuer reimburses a procedure, such as imaging, at a 
global rate that includes both professional and technical charges, then 
that global rate is a rate for a bundled payment arrangement for which 
the applicable content elements must be disclosed, just as for all 
other items and services. The final rules adopt the provision that 
plans and issuers provide a list of items or services for items and 
services subject to bundled payment arrangements for which a cost-
sharing liability estimate is being disclosed, with non-substantive 
edits for improved readability.
f. Sixth Content Element: Notice of Prerequisites to Coverage
    The sixth content element is a notification, whenever applicable, 
informing the individual that a specific covered item or service for 
which the individual requests cost-sharing information may be subject 
to a prerequisite for coverage. The proposed rules defined the term 
prerequisite to mean certain requirements relating to medical 
management techniques for covered items and services that must be 
satisfied before a plan or issuer will cover the item or service. 
Specifically, the proposed rules provided that prerequisites include 
such techniques as concurrent review, prior authorization, and step-
therapy or fail-first protocols. In the proposed rules, the Departments 
intended for the definition of prerequisite to capture medical 
management techniques that apply to an item or service that require 
action by the participant, beneficiary, or enrollee before the group 
health plan or health insurance issuer will cover the item or service. 
Accordingly, the proposed definition of prerequisite did not include 
medical necessity determinations generally, or other forms of medical 
management techniques that do not require action by the participant, 
beneficiary, or enrollee. While the prerequisites enumerated in the 
proposed rules were provided as an illustrative list, the Departments 
solicited comment on whether there are any additional medical 
management techniques that should be explicitly included as 
prerequisites in the final rules.
    Several commenters supported the inclusion of this element. One 
commenter stated that helping patients understand any coverage 
prerequisites prior to care, such as prior authorization, may help to 
eliminate some of the confusion and unnecessary administrative burden 
following care. Another stated that requiring a plan to disclose 
prerequisites in an easily understandable format may help patients 
complete required protocols and thus would improve adherence.
    A few commenters recommended additional disclosures or offered 
suggestions to strengthen these requirements. One commenter encouraged 
the Departments to include clinical coverage policies for services that 
are more specific than general medical necessity criteria. For example, 
some plans and issuers utilize coverage policies that require specific 
diagnoses or documented symptoms before an item or service may be 
covered. The commenter explained that while these

[[Page 72201]]

policies may not technically require an action by the beneficiary, they 
are important in determining whether the specific item or service is 
covered. Another commenter recommended that plans and issuers clearly 
disclose every utilization control that stands between the participant, 
beneficiary, or enrollee and a prescription, suggesting that this type 
of disclosure would help patients meet utilization control standards. 
Another commenter urged the Departments to strengthen this requirement 
by requiring plans and issuers to provide a description of the actual 
required prerequisites. The commenter stated that the proposed 
regulation requires only notification of the existence of a 
prerequisite, but not any detail about what the prerequisite is and how 
it can be satisfied. Two commenters encouraged the Departments to 
standardize this type of notification language to ensure that all 
consumers receive a consistent message regarding the provision of 
health care services.
    One commenter requested that the Departments provide that the 
prerequisites listed in proposed rules (that is, concurrent review, 
prior authorization, step-therapy, and fail-first protocols) are an 
exclusive list. Another commenter stated that prerequisite notification 
should be limited to simple notifications that prerequisites apply to a 
service, and communication of specific prerequisites should not be 
required until a Fast Healthcare Interoperability Resources (FHIR) 
standard for transmission of this information is established and 
operationalized.
    As discussed in the proposed rules, the Departments intended for 
the definition of prerequisite to capture medical management techniques 
that apply to an item or service that require action by the 
participant, beneficiary, or enrollee before the plan or issuer will 
cover the item or service. The Departments consider plan or policy 
provisions that require a diagnosis or documented symptoms before a 
service or item would be covered to be medical necessity determination 
requirements that do not require action on behalf of the participant, 
beneficiary, or enrollee. Therefore, the Departments did not include 
such terms in the proposed prerequisite requirement. The Departments 
are finalizing regulation text to reflect that concurrent review, prior 
authorization, and step-therapy or fail-first protocols are the 
exhaustive list of prerequisites about which plans and issuers would 
need to provide notice. Furthermore, while the Departments acknowledge 
that providing a complete description of prerequisites might be helpful 
to consumers, the Departments are not of the view that requiring plans 
or issuers to provide such descriptions is necessary. The Departments 
determined that requiring a complete description of the prerequisite 
would create unnecessary complexity and impose significant burdens on 
plans and issuers regarding information that is already available in 
plan documents. Additionally, while the Departments recognize the 
importance of FHIR in the push towards greater interoperability, it is 
not necessary to delay finalizing these rules until the FHIR standards 
are finalized as the final rules do not require any APIs to be built 
nor exposed for public consumption. The final rules adopt this content 
element requirement, with the modifications discussed in this section.
g. Seventh Content Element: Disclosure Notice
    The seventh and final content element proposed is a notice that 
communicates certain information in plain language, including several 
specific disclosures. First, the Departments proposed that this notice 
would include a statement that out-of-network providers may bill 
participants, beneficiaries, or enrollees for the difference between 
providers' billed charges and the sum of the amount collected from the 
group health plan or health insurance issuer and the amount collected 
from the participant, beneficiary, or enrollee in the form of cost-
sharing (the difference often referred to as balance billing) and that 
these estimates do not account for those potential additional amounts. 
In the proposed rules, the Departments acknowledged that there are 
numerous state laws that address balance-billing practices such that 
the notice described in the proposed content element regarding balance 
bills may be misleading or inaccurate for beneficiaries, participants, 
or enrollees enrolled in a plan or coverage in certain states. The 
Departments requested comment on whether any modifications to this 
content element would be appropriate to allow plans and issuers to 
accurately advise participants, beneficiaries, or enrollees of their 
potential exposure to or protection from any balance bills.
    Second, the Departments proposed that the notice be required to 
convey that actual charges for the participant's, beneficiary's, or 
enrollee's covered items and services may be different from those 
described in a cost-sharing liability estimate, depending on the actual 
items and services received at the point of care.
    Third, the Departments proposed that the notice be required to 
include a statement that the estimated cost-sharing liability for a 
covered item or service is not a guarantee that coverage will be 
provided for those items and services.
    Finally, the Departments proposed that plans and issuers be 
permitted to include any additional information, including other 
disclaimers that the plan or issuer determines appropriate, so long as 
the additional information does not conflict with the information they 
are required to provide. For example, plans and issuers would have been 
permitted to include additional language so long as the language could 
not reasonably be read to disclaim the plan's or issuer's 
responsibility for providing a participant, beneficiary, or enrollee 
with accurate cost-sharing information, or plans and issuers could 
choose to provide a disclaimer that informs consumers who are seeking 
estimates of cost-sharing liability for out-of-network allowed amounts 
that they may have to obtain a price estimate from the out-of-network 
provider in order to fully understand their out-of-pocket cost 
liability. Plans and issuers would also have been permitted to provide 
a disclaimer indicating how long the price estimate will be valid, 
based on the last date of the contract term for the negotiated rate or 
rates (if multiple providers with different contract terms are 
involved). The Departments are of the view that this type of disclaimer 
could provide participants, beneficiaries, and enrollees with a better 
understanding of how their cost estimate may change over time. The 
Departments sought comment on whether a specific disclaimer indicating 
the expiration of the cost estimate should be required. Furthermore, 
the Departments explained in the proposed rules that plans and issuers 
may also include disclaimer information regarding prescription drug 
cost estimates and whether rebates, discounts, and dispensing fees may 
impact the actual cost to the participant, beneficiary, or enrollee.
    The Departments developed model language that plans and issuers 
could use, but would not be required to use, to satisfy the disclosure 
notice requirements described above. This model language was proposed 
contemporaneously with, but separate from, the proposed rules.\115\ The

[[Page 72202]]

Departments sought comment on the proposed model language and any 
additional information that stakeholders believed should be included in 
the model notice or any information that should be omitted from the 
model notice.
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    \115\ ``Transparency in Coverage. Model Notice.'' United States 
Department of Labor. Available at: https://www.dol.gov/sites/dolgov/files/ebsa/laws-and-regulations/laws/affordable-care-act/for-employers-and-advisers/transparency-in-coverage-draft-model-disclosure.pdf.
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    The proposed rules clarified that this disclosure notice would be 
in addition to the information that QHP issuers are currently required 
to publish on their websites pursuant to 45 CFR 156.220(a)(7) regarding 
cost-sharing and payments with respect to out-of-network coverage. In 
addition, some portions of this disclosure may overlap with network 
adequacy disclosure standards under 45 CFR 156.230(e). That section 
requires QHP issuers to count the cost-sharing paid by an enrollee for 
an out-of-network essential health benefit (EHB) provided by an out-of-
network ancillary provider in an in-network setting toward the 
enrollee's out-of-pocket limit or provide a notice to the enrollee that 
additional costs may be incurred for an EHB, including balance billing 
charges, if applicable.
    The Departments requested comment on the proposed notice 
disclaimers and whether any additional disclaimers would be necessary 
or beneficial to participants, beneficiaries, and enrollees in learning 
about their potential cost-sharing liability for covered items and 
services. For example, the Departments inquired whether the Departments 
should require a notice that explains that the cost-sharing information 
provided may not account for claims a participant, beneficiary, or 
enrollee has submitted that the plan or issuer has not yet processed. 
The Departments also considered whether to require plans and issuers to 
provide a participant, beneficiary, or enrollee information regarding 
non-covered items or services for which the individual requests cost-
sharing information. For example, there could be a requirement that a 
plan or issuer provide a statement, as applicable, indicating that the 
item or service for which the participants, beneficiaries, and 
enrollees has requested cost-sharing information is not a covered 
benefit under the terms of the plan or coverage, and expenses charged 
for that item or service will not be reimbursed by the plan or 
coverage.
    Several commenters agreed with the proposed disclosure notice 
requirements. Specifically, many commenters supported the disclosure 
that estimates may not reflect the amount ultimately charged to the 
participant, beneficiary, or enrollee. One commenter recommended the 
disclosure include examples of circumstances under which a 
participant's, beneficiary's, or enrollee's actual cost-sharing 
liability may differ from the estimate provided by their plan or issuer 
(for example, comorbidities or unanticipated complications). The 
commenter stated that a more comprehensive explanation of how 
participant, beneficiary, or enrollee characteristics might affect 
charges for covered items and services would help them better 
understand their potential exposure to higher cost-sharing amounts. One 
commenter suggested that the notice include stronger wording to educate 
the plan participant about the strong likelihood of a surprise amount 
due that differs greatly from the estimate. One commenter recommended 
that the notice include information that DIR Fees charged to pharmacies 
inflate participants', beneficiaries', and enrollees' cost sharing and 
that plans and issuers may claw back that inflated cost sharing from 
the pharmacy.
    One commenter recommended that plans and issuers be required to 
disclose additional information to help participants, beneficiaries, 
and enrollees understand the appropriate point of contact for questions 
and complaints. This commenter recommended that the final rules require 
issuers to provide participants, beneficiaries, and enrollees with 
contact information for their state departments of insurance when 
covered by insurance that is primarily state-regulated. For group 
health plans that are not fully insured, the commenter recommended that 
the plan provide contact information for the appropriate Federal 
regulator.
    One commenter requested flexibility with disclaimer language 
regarding a notice provided in paper form to reflect that the estimate 
may not be reflective of services received or claims processing, or to 
direct the participant, beneficiary, or enrollee to call their plan or 
issuer or use the internet for more up-to-date information. Similarly, 
one commenter recommended that a timestamp be required for notices 
provided in paper form to account for potential price changes. Several 
commenters supported requiring plans and issuers to add to the notice a 
date on which the estimate will expire, while other commenters did not.
    One commenter expressed concern regarding the statement in the 
preamble to the proposed rules that the required disclosure notice 
regarding balance-billing information ``may be misleading or inaccurate 
for beneficiaries, participants, or enrollees enrolled in a plan or 
coverage in certain states,'' given the multi-state nature of most 
employer-sponsored plans. Another commenter stated that state 
regulators should be able to direct issuers to include information in 
the disclosure that accurately describes the state's balance billing 
laws, and that any notice provided to consumers in advance of receiving 
services should have information as to whether the participant, 
beneficiary, or enrollee is likely to be protected from liability under 
state or Federal balance billing laws. The commenter further stated 
that some states already have state laws related to disclosure of costs 
to consumers and the final rules should be clear that this requirement 
does not preempt these state requirements. Two commenters urged the 
Departments to make clear that participants, beneficiaries, and 
enrollees are not protected from out-of-network provider and facility 
balance billing, except where balance billing would be barred by state 
law.
    The final rules are not intended to preempt state laws regarding 
balance billing. In the final rules, the Departments have modified this 
requirement to clarify that the balance billing statement is only 
required if balance billing is permitted under state law. Plans and 
issuers have flexibility to use the model notice language or create 
their own notices with greater specificity regarding their state's 
laws.
    One commenter expressed concern that allowing plans to include a 
statement that the estimated cost-sharing liability is not a guarantee 
of coverage negates the intent of the proposed rules, given that 
consumers who receive a notice from their health plan regarding 
estimated out-of-pocket costs would naturally assume coverage of those 
services.
    The Departments acknowledge this concern; however, there are many 
reasons estimated cost-sharing information may not be accurate when 
items and services are ultimately furnished. For example, it is 
possible for coverage to end (for example, due to non-payment of 
premiums) between the time an estimate is provided and an item or 
service is furnished. Additionally, an estimate may show the cost for 
an item or service as a treatment for a certain condition, but the item 
or service may not be covered for the condition that is ultimately 
diagnosed at the point of care. Therefore, the final rules adopt the 
provision as proposed.
    Several commenters recommended that the Departments issue 
guidelines as to what is considered ``plain language.'' The commenters 
recommended that the Departments provide examples of

[[Page 72203]]

typical disclosure language compared to its ``plain language'' 
equivalent. They further recommended that these examples be tested 
through various focus groups to ensure consumer comprehension.
    The final rules define ``plain language'' to mean language written 
and presented in a manner calculated to be understood by the average 
participant, beneficiary, or enrollee.\116\ Determining whether this 
standard has been satisfied requires taking into account such factors 
as the level of comprehension and education of typical participants, 
beneficiaries, or enrollees in the plan or coverage and the complexity 
of the terms of the plan. Accounting for these factors would require 
limiting the use of technical jargon and long, complex sentences, so 
that the information provided will not have the effect of misleading, 
misinforming, or failing to inform participants, beneficiaries, or 
enrollees. The Departments are of the view that the final rules and 
this preamble provide sufficient detail regarding the meaning of plain 
language.
---------------------------------------------------------------------------

    \116\ 29 CFR 2520.102-2(a).
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    Some commenters recommended that plans and issuers should disclose 
whether they count copayment assistance and other third-party payments 
in the calculation of the beneficiary's deductible and out-of-pocket 
maximum. The commenter noted that as more plans implement copay 
accumulators that do not count these payments, issuers should be 
required to disclose these policies to their beneficiaries.
    The Departments are of the view that knowing whether these payments 
apply to accumulators is germane to price transparency and should be 
required in the final rules. To that end, the final rules adopt a fifth 
notice content requirement (codified at 26 CFR 54.9815-
2715A2(b)(1)(vii)(D), 29 CFR 2590.715-2715A2(b)(1)(vii)(D), and 45 CFR 
147.211(b)(1)(vii)(D)) that plans and issuers must provide a statement 
disclosing whether copayment assistance and other third-party payments 
are included in the calculation of the participant's, beneficiary's, or 
enrollee's deductible and out-of-pocket maximum.
    As discussed under the first content element, some items or 
services may not be subject to cost sharing if they are furnished as 
preventive items or services, while the same item or service could be 
subject to cost sharing if it is furnished for non-preventive purposes 
or provided by an out-of-network provider. Therefore, the final rules 
adopt an additional notice requirement (codified at 26 CFR 54.9815-
2715A2(b)(1)(vii)(E), 29 CFR 2590.715-2715A2(b)(1)(vii)(E), and 45 CFR 
147.211(b)(1)(vii)(E)) stating that, for an item or service that is a 
recommended preventive service under section 2713 of the PHS Act where 
the plan or issuer cannot determine whether the request is for a 
preventive or non-preventive item or service, the plan or issuer must 
provide a statement that the item or service may not be subject to 
cost-sharing if it is billed as a preventive service.
    One commenter recommended information be included to help 
participants, beneficiaries, and enrollees understand the appropriate 
point of contact for questions and complaints. This commenter 
recommended issuers provide consumers with contact information for the 
appropriate regulator--either the State Department of Insurance or the 
appropriate Federal office.
    The Departments appreciate this recommendation, but are declining 
to finalize this additional requirement because the Departments are of 
the view that plans and issuers already have avenues in place to 
address participants', beneficiaries', and enrollees' complaints.
    Several commenters recommended that additional notice disclaimers 
be provided. One commenter suggested that the final rules require a 
statement that cost-sharing liability estimates may differ from actual 
costs, depending on changes after claims are processed. Another 
commenter recommended that the Departments develop model disclaimers 
stating that quoted amounts for drugs may be time-limited and subject 
to manufacturer pricing practices. Another commenter recommended the 
addition of consumer disclaimers indicating that ``services subject to 
the cost estimate may be provided and billed by providers associated 
with multiple payer contracts which will result in multiple EOBs.'' 
Another commenter recommended the Departments permit plans to require 
participants, beneficiaries, and enrollees to review and acknowledge a 
disclaimer prior to viewing or searching for any pricing information, 
which would help ensure that consumers understand that what they are 
receiving may not be an accurate estimate of their total out-of-pocket 
costs. Another commenter recommended that the presentation of the out-
of-network information make clear that the issuer is unable to provide 
an estimate for the full cost of the service. The commenter suggested 
that this disclosure should be presented on the same screen as the 
maximum allowed amount and the participant, beneficiary, or enrollee's 
cost liability because it may be unclear that the maximum allowed 
amount is not the total cost of care. Another commenter requested that 
the Departments add a requirement that plans or issuers provide 
participants, beneficiaries, or enrollees with meaningful and simple 
explanations regarding emergency care, including informing them of the 
prudent layperson standard.\117\ Another commenter that recommended 
plans and issuers be required to provide explanatory information about 
the operation of their plans, including glossaries of relevant terms 
and explanations of insurance plan features and health care services, 
including in-network and out-of-network costs, limited plan designs, 
deductibles, telehealth, and additional features in consumer-friendly 
language.
---------------------------------------------------------------------------

    \117\ 42 CFR 438.114.
---------------------------------------------------------------------------

    The Departments decline to adopt these commenters' suggestions for 
additional notice disclaimers. The Departments are of the view that 
adopting these additional requirements would add to the burden imposed 
on plans and issuers without creating corresponding benefits for 
participants, beneficiaries, or enrollees that would outweigh the 
burden, and would be unhelpfully prescriptive regarding the information 
plans and issuers are required to convey to these individuals. Existing 
plan and issuer resources for this information, such as the uniform 
glossary required under the Summary of Benefits and Coverage (SBC) 
final regulation \118\ provide consumer-friendly language definitions 
of insurance terms. Additionally, in response to comment, the 
Departments are providing flexibility to plans and issuers to design 
their internet-based tools and disclosures so that they meet the needs 
of their participants, beneficiaries, and enrollees. However, the 
Departments encourage plans and issuers to provide additional 
information at their discretion, if appropriate. The final rules adopt 
these provisions as proposed, with one correction of a typographical 
error (``bill'' rather than ``billed'') in 26 CFR 54.9815-
2715A2(b)(1)(vii)(A), 29 CFR 2590.715-2715A2(b)(1)(vii)(A), and 45 CFR 
147.211(b)(1)(vii)(A) and a clarification that this statement element 
is only required if balance billing is permitted under state law, with 
paragraph (b)(1)(vii)(D) redesignated as paragraph (b)(1)(vii)(F), and 
with new paragraphs (b)(1)(vii)(D) and (E) added,

[[Page 72204]]

as described earlier in this section of this preamble.
---------------------------------------------------------------------------

    \118\ 80 FR 34292 (Jun. 16, 2015).
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2. Required Methods for Disclosing Information to Participants, 
Beneficiaries, or Enrollees
    Section 1311(e)(3)(C) of PPACA requires that cost-sharing 
information be made available through an internet website and other 
means for individuals without access to the internet. Therefore, in the 
proposed rules, the Departments proposed to require that group health 
plans and health insurance issuers disclose to participants, 
beneficiaries, or enrollees the cost-sharing information described 
earlier in this preamble in two ways: (1) Through a self-service tool 
that meets certain standards and is available on an internet website, 
and (2) in paper form.
a. First Delivery Method: Internet-Based Self-Service Tool
    Under the proposed rules, plans and issuers would be required to 
make available a self-service tool on an internet website for their 
participants, beneficiaries, or enrollees to use, without a 
subscription or other fee, to search for cost-sharing information for 
covered items and services. The tool would be required to allow users 
to search for cost-sharing information for a covered item or service 
provided by a specific in-network provider, or by all in-network 
providers. The tool also would be required to allow users to search for 
the out-of-network allowed amount for a covered item or service 
provided by out-of-network providers. The tool would be required to 
provide users real-time responses that are based on cost-sharing 
information that is accurate at the time of the request.
    Many commenters supported the Departments' proposal to require 
plans and issuers to make available personalized out-of-pocket cost 
information for all covered health care items and services through an 
internet-based self-service tool and urged the Departments to finalize 
this section of the regulation as proposed. Some commenters recommended 
the Departments identify a core set of functional requirements that 
must be included in all price transparency tools. Commenters suggested 
that these functional requirements should ensure all people enrolled in 
commercial products have access to the same baseline functionality, 
while providing enough flexibility for issuers to develop, and iterate 
on, innovative existing internet-based self-service tools. Examples of 
functional requirements include providing tailored information to 
participants, beneficiaries, or enrollees on their benefit summary 
(plan coverage, copayments, deductibles); being able to browse by 
service category (for example, medical specialty, procedures, drugs, 
imaging, labs) or diagnosis; or being able to select from an A-Z list 
of popular searches or episodes of care. One commenter recommended the 
following functional requirements: (1) Provide individuals with their 
personal health plan details, a digital ID card, deductible and copay 
information, the ability to download and view claims, and information 
on provider network status and quality performance; (2) display cost 
and quality information in clear, user-friendly language to facilitate 
and inform health care decisions; (3) allow consumers to compare 
facilities and clinicians based on curated cost estimates, common 
quality measures, value metrics, and patient ratings; (4) offer 
personalized out-of-pocket cost estimates for episodes of care, 
services, and prescriptions, calculated using their specific health 
plan design before they receive care; (5) comply with all state and 
Federal health care data privacy and security laws, including the 
Health Insurance Portability and Accountability Act (HIPAA) privacy and 
security rules and the Health Information Trust (HITRUST) Common 
Security Framework.
    The Departments agree that the self-service tool requirements 
should ensure all people enrolled in group health plans and health 
insurance coverage have access to the same baseline functionality, 
while providing enough flexibility for plans and issuers to develop and 
iterate on innovative internet-based self-service tools. It is the 
Departments' intent that the required elements be broad enough to avoid 
being overly prescriptive for plans and issuers. The Departments agree 
that certain additional content elements could be beneficial to 
participants, beneficiaries, and enrollees, including general benefit 
summary information and quality metrics. However, the primary initial 
goal of the self-service tool is to provide personalized out-of-pocket 
cost estimates for episodes of care, services, and prescriptions, and 
to provide transparency around the pricing elements that determine out-
of-pocket costs. Therefore, the Departments are not inclined to require 
additional elements unrelated to this primary goal at this time. The 
Departments note that the intent of the final rules is to provide a 
minimum standard for the disclosure of pricing information to lay a 
foundation for transparency in coverage and the Departments may 
consider additional disclosure requirements to build upon the final 
rules in the future. To that end, the Departments are finalizing the 
required content elements for the self-service tool as described 
earlier in this preamble to the final rules. The final rules include a 
change regarding the search function related to out-of-network allowed 
amounts. Specifically, that element is modified to include the other 
metrics that a plan or issuer is permitted to use in place of out-of-
network allowed amounts, as discussed earlier in this preamble in 
connection with the fourth content element that must be disclosed to 
participants, beneficiaries, and enrollees. Additionally, the 
Departments encourage plans and issuers to add additional elements to 
their tools according to the needs of the populations they serve.
    In order for plans and issuers to provide accurate cost-sharing 
information, the Departments noted that the participant, beneficiary, 
or enrollee will have to input certain data elements into the tool. 
Therefore, under the proposed rules, plans and issuers would be 
required to make available a tool that allows users to search for cost-
sharing information: (1) By billing code (for example, Current 
Procedural Terminology (CPT) Code 87804) or, (2) by a descriptive term 
(for example, ``rapid flu test''), at the option of the user. The tool 
also would be required to allow users to input the name of a specific 
in-network provider in conjunction with a billing code or descriptive 
term, to produce cost-sharing information, and a cost-sharing liability 
estimate for a covered item or service provided by that in-network 
provider. Regarding a request for cost-sharing information for all in-
network providers, under the proposed rules, if a plan or issuer 
utilizes a multi-tiered network, the tool would be required to produce 
the relevant cost-sharing information for the covered item or service 
for individual providers within each tier. In the proposed rules, the 
Departments explained that to the extent that cost-sharing information 
for a covered item or service under a plan or coverage varies based on 
factors other than the provider, the tool would also be required to 
allow users to input sufficient information for the plan or issuer to 
disclose meaningful cost-sharing information. For example, if the cost-
sharing liability estimate for a prescription drug depends on the 
quantity and dosage of the drug, the tool would be required to allow 
the user to input a quantity and dosage for the drug for which he or 
she is seeking cost-

[[Page 72205]]

sharing information. Similarly, to the extent that the cost-sharing 
liability estimate varies based on the facility at which an in-network 
provider furnishes a service (for example, at an outpatient facility 
versus in a hospital setting), the tool would be required to either 
permit a user to select a facility, or display in the results cost-
sharing liability information for every in-network facility at which 
the in-network provider furnishes the specified item or service.
    It remains the Departments' understanding that a plan or issuer may 
require certain information, in addition to the identification of a 
covered item or service, before it can provide an out-of-network 
allowed amount for a covered item or service, and that plans and 
issuers may have different ways of establishing an allowed amount for 
covered items or services from an out-of-network provider (such as by 
zip code or state). Therefore, under the final rules, plans and issuers 
are required to allow users to search for the out-of-network allowed 
amount or other metric as discussed in the fourth content element, for 
a covered item or service provided by out-of-network providers, by 
inputting a billing code or descriptive term and the information that 
is necessary for the plan or issuer to produce the out-of-network 
allowed amount (such as the zip code for the location of the out-of-
network provider).
    To the extent a user's search returns multiple results, the tool 
would be required to have functionalities that would allow users to 
refine and reorder results (also referred to as sort and filter 
functionalities) by geographic proximity of providers and the amount of 
estimated cost-sharing liability. The Departments solicited comment on 
whether the tool should be required to have additional refining and 
reordering functionality, including whether it would be helpful or 
feasible to refine and reorder by provider subspecialty (such as 
providers who specialize in pediatric psychiatry), or by the quality 
rating of the provider, if the plan or issuer has available data on 
provider quality.
    Some commenters stated that it is unrealistic to expect consumers 
to know and understand CPT/Diagnosis Related Group (DRG)/International 
Classification of Disease-10 (ICD-10) codes and supported the inclusion 
of descriptive terms. One commenter stated that search capability by 
standard medical terms will be crucial, and that, to be successful, 
this type of search system will need to be broad and user-friendly, 
accommodating an extensive range of consumer inputs and terms. Another 
commenter recommended the tool also contain a layperson-friendly 
descriptor of the service to improve understanding. Other commenters 
lauded the requirement that issuers must use plain language when 
disclosing price information, which would ensure that patients can 
understand their expected costs without expert knowledge of insurance 
language and practices. Some commenters recommended that the 
Departments follow industry standards and use the CMS-approved National 
Correct Coding Initiative (CCI) for consumer searches, as well as for 
any information relating to standards for services that fall into 
bundled payment arrangements.
    One commenter expressed concern that the conversion of thousands of 
CPT codes into plain English by thousands of health plans, carriers, 
and TPAs is inefficient, and will result in inconsistencies across the 
country. For example, there are multiple CPT codes for procedures in a 
hospital that differ in price depending upon severity, which is often 
unknown when a procedure is first recommended.
    The Departments agree that it is essential for tools to support 
descriptive terms because consumers may not be familiar with specific 
procedure codes. The Departments acknowledge the challenge of 
converting CPT code descriptions to plain language but are of the view 
that the benefit to consumers outweighs the burden to plans and 
issuers. The Departments also acknowledge the potential value in 
requiring the use of CCI standards but are of the view that their use 
should be voluntary, not required, in order to avoid placing additional 
burdens on plans and issuers in the absence of clear benefits to 
consumers. As noted earlier in this preamble, the intent of the final 
rules is to provide foundational requirements and to allow plans and 
issuers maximum flexibility to build upon existing tools while 
providing consumers with reliable cost estimates. The Departments also 
highlight that the phased implementation of the final rules affords 
plans and issuers additional time to address administrative challenges. 
Accordingly, the final rules adopt this provision as proposed.
    One commenter sought clarification that the tool is not required to 
support searches with multiple parameters at the same time (for 
example, by provider name and medical code at once). Another commenter 
suggested that the Departments allow that, as one permissible method, 
the tool may provide for geographic proximity based on a zip code 
entered by the participant, beneficiary, or enrollee to enable the 
consumer to choose whether to search based on the proximity to home or 
work or some other location.
    The self-service tool must allow users to search for cost-sharing 
information for a covered item or service by inputting the name of a 
specific in-network provider in conjunction with a billing code or 
descriptive term, as well as other relevant factors like location of 
service, facility name, or dosage. For covered items and services 
provided by out-of-network providers, the tool should provide the out-
of-network allowed amount, percentage of billed charges, or other rate 
that provides a reasonably accurate estimate of the amount a plan or 
issuer will pay by allowing consumers to input a billing code, 
descriptive code, or other relevant factor, such as location. In 
addition, the final rules adopt the requirement that the tool must 
allow the user to refine and reorder search results based on geographic 
proximity of in-network providers. The final rules require refining and 
reordering search results only for in-network providers, as the 
Departments are of the view that doing so for out-of-network providers 
would be too burdensome at this stage. The Departments expect that in 
order for beneficiaries, participants, and enrollees to search for out-
of-network providers, they would have to input, at minimum, the billing 
code or name of an item or service and the geographical location of the 
provider. In addition, in order to align with revisions to the fourth 
content element allowing flexibility to provide another rate instead of 
the out-of-network allowed amount, the final rules have been revised to 
reflect that participants, beneficiaries, and enrollees can search for 
the out-of-network allowed amount, the percentage of billed charges, or 
other rate that provides a reasonably accurate estimate of the amount a 
plan or issuer will pay for a covered item or service provided by out-
of-network providers. This ``other rate'' is also included in paragraph 
(b)(2)(i)(B)(2) of the final regulations for consistency.
    Regarding refining and reordering features, one commenter suggested 
that the tools include an ability to display only in-network providers 
and an ability to filter or sort by provider quality if a quality 
metric is made available. Three commenters requested that requirements 
not limit plans to developing provider and service filters that only 
account for price and geographic proximity: they suggested that the 
tools should also have functionality filters based on sub-specialty and 
a measure of value. Another commenter requested that any

[[Page 72206]]

additional functionality relating to refining and reordering search 
results be optional for plans and issuers at this time.
    One commenter stated that, to enhance the accuracy of the tool and 
better account for fluctuations in cost-sharing amounts, the 
Departments should require that it be configured to allow users to 
self-select health characteristics (for example, chronic conditions, 
body mass index) in order to further personalize its outputs for 
consumers. The commenter recommended that payers be given flexibility 
to dictate the specific health characteristics to be included in their 
tools based on their participant, beneficiary, and enrollee 
populations, the types of products that they offer, and other elements 
that might cause cost-sharing estimates to fluctuate.
    The Departments agree that plans and issuers should have 
flexibility to design tools that can maximize consumer utility and 
acknowledge that the suggested additions to search functionality could 
be beneficial to consumers. However, the Departments decline to require 
the adoption of these suggestions to preserve plans and issuers' 
discretion regarding the most effective way to provide search results 
and to avoid being overly burdensome or prescriptive.
    The Departments intend that plans and issuers create user-friendly 
internet-based self-service tools, but the proposed rules did not 
include a definition for ``user-friendly'' because there are a variety 
of ways a tool can be designed to be user-friendly. The Departments 
wish to preserve plan and issuer flexibility to create tools that are 
best for their participants, beneficiaries, or enrollees, including by 
soliciting user feedback and consumer testing in the development of 
their tools. However, it is the Departments' view that a user-friendly 
tool would mean a tool that allows intended users to search for the 
cost-sharing information outlined in the final regulations efficiently 
and effectively, without unnecessary steps or effort. The Departments 
are of the view that plans and issuers can look to Federal plain 
language guidelines, ERISA requirements for a Summary Plan 
Description's method of presentation at 29 CFR 2520.102-2(a), and 
general industry standards for guidance when designing and developing 
their internet-based self-service tools.\119\
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    \119\ ``Federal plain language guidelines.'' United States 
General Services Administration. Available at: https://www.plainlanguage.gov/guidelines/.
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    The Departments also received comments on whether the self-service 
tool should be made available through an internet website, through a 
mobile application, or both. The proposed rules provided that the self-
service tool be made available on an internet website to be consistent 
with section 1311(e)(3)(C) of PPACA, which provides that ``at a 
minimum,'' cost-sharing information be made available through an 
``internet website.'' However, the Departments sought feedback on 
whether this term should be interpreted to include other comparable 
methods of accessing internet-based content. The statute was enacted in 
2010, when the primary mode of accessing internet-based content was 
through a personal computer. Since that time, ownership of mobile 
devices with internet access and use of internet-based mobile 
applications has become much more common. The Departments acknowledged 
that there may be technical differences between a website and other 
methods of viewing internet-based content, such as mobile applications. 
However, as stated in the proposed rules, the Departments also 
understand that technology evolves over time, and it is the 
Departments' view that Congress did not intend to limit the ability to 
access information via alternative methods of viewing internet-based 
content that may be available now or in the future.
    The Departments acknowledged that mobile applications may provide 
benefits beyond those of traditional websites. Due to the portability 
of mobile devices, a self-service tool that is made available through a 
mobile application might provide participants, beneficiaries, 
enrollees, and their health care providers greater opportunities to use 
the tool together at the point of care to evaluate treatment options 
based on price. The Departments further acknowledged that mobile 
applications, as a general matter, may offer greater privacy and 
security protections than an internet website, accessed either from a 
mobile device or a computer.\120\ Accordingly, the Departments sought 
comment on whether the final rules should permit the proposed 
disclosure requirements to be satisfied with a self-service tool that 
is made available through a website or comparable means of accessing 
the internet, such as a mobile application, or whether multiple means, 
such as websites and mobile applications, should be required. The 
Departments also sought comment on the relative resources required for 
building an internet website versus an internet-based mobile 
application.
---------------------------------------------------------------------------

    \120\ Kassner, M. ``Apps vs. mobile websites: Which option 
offers users more privacy?'' Tech Republic. September 30, 2016. 
Available at https://www.techrepublic.com/article/apps-vs-mobile-websites-which-option-offers-users-more-privacy/; see also Colburn, 
K. ``Is using a banking app safer for managing your account 
online?'' AZcentral. September 17, 2018. Available at https://www.azcentral.com/story/money/business/tech/2018/09/17/online-banking-app-safety-security-smartphone-tech-tips/1212736002/; see 
also Ogata, M., et al. ``Vetting the Security of Mobile 
Applications.'' National Institute of Standards and Technology, 
United States Department of Commerce. April 2019. Available at: 
https://doi.org/10.6028/NIST.SP.800-163r1.
---------------------------------------------------------------------------

    Some commenters recommended that the Departments finalize the 
proposed rules with the self-service tool requirement satisfied by 
being made available through a website or comparable means of accessing 
the internet. Others believed that plans and issuers should be free to 
determine whether to offer a mobile app, an internet website, or both. 
One commenter stated the resources necessary for building and 
supporting a mobile application are significantly greater than building 
a website and did not support a proposal to require multiple 
applications, while other commenters supported a mobile application to 
enable patients to make cost-effective decisions in the doctor's 
office. Another commenter recommended both a mobile application and an 
internet-based platform with fully responsive internet-based design. 
Two commenters recommended that the requirements not preclude a plan, 
issuer, or TPA from developing other means of electronic delivery 
beyond internet disclosure.
    The Departments have considered these comments and are of the view 
that requiring an internet website, as opposed to a comparable means of 
accessing the internet, such as a mobile application or both, ensures 
access to a broader set of consumers while limiting the burden on plans 
and issuers to produce both an internet site and a mobile application. 
Internet websites can be accessed on mobile devices and people without 
access to the internet or mobile devices can access tools through 
resources where internet access may be available, such as a local 
library. Conversely, if the tool were available only through a mobile 
device, people without a capable mobile device would not have access to 
the tool. The final rules, therefore, adopt the requirement that the 
self-service tool be provided via internet website; however, the 
Departments encourage plans and issuers to also provide a mobile 
application version in addition to an internet website.

[[Page 72207]]

b. Second Delivery Method: Paper Form
    Paragraph (e)(3)(C) of section 1311 of PPACA specifies that at a 
minimum, cost-sharing information be made available to an individual 
through an internet website and such other means for individuals 
without access to the internet. Therefore, the proposed rules included 
a proposal that group health plans and health insurance issuers would 
have to furnish, at the request of the participant, beneficiary, or 
enrollee, without a fee, all of the information required to be 
disclosed under paragraph (b)(1) of the proposed regulations, as 
outlined earlier in this preamble, in paper form. Further, the proposed 
rules included a proposal that a plan or issuer would be required to 
provide the information in accordance with the requirements under 
paragraph (b)(2)(i) of the proposed regulations and as described 
earlier in this preamble. That is, the plan or issuer would be required 
to allow an individual to request cost-sharing information for a 
discrete covered item or service by billing code or descriptive term, 
according to the participant's, beneficiary's, or enrollee's request. 
Further, the plan or issuer would be required to provide cost-sharing 
information for a covered item or service in connection with an in-
network provider or providers, or an out-of-network allowed amount for 
a covered item or service provided by an out-of-network provider, 
according to the participant's, beneficiary's, or enrollee's request, 
permitting the individual to specify the information necessary for the 
plan or issuer to provide meaningful cost-sharing liability information 
(such as dosage for a prescription drug or zip code for an out-of-
network allowed amount). To the extent the information the individual 
requests returns more than one result, the individual would also be 
permitted to request that the plan or issuer refine and reorder the 
information disclosed by geographic proximity and the amount of the 
cost-sharing liability estimates.
    The Departments proposed that this information would be required to 
be mailed to a participant, beneficiary, or enrollee via the U.S. 
Postal Service or other delivery system no later than 2 business days 
after a participant's, beneficiary's, or enrollee's request is 
received.
    Two commenters supported the Departments' proposal to allow 
individuals the ability to access their information through electronic 
means or via paper form, given that many Americans lack access to high-
speed internet services. Some commenters opposed the requirement to 
deliver the cost-sharing information to participants in paper form due 
to administrative burden, while others recommend limiting the 
requirements. Several recommended the timeframe to respond be expanded, 
including a range of 5 days to 10 days. One commenter requested that 
the compliance time for producing paper copies of personalized 
information be consistent with current Federal requirements for 
furnishing paper copies of the SBC, Summary Plan Description, or 
Consolidated Omnibus Budget Reconciliation Act (COBRA) notices. Other 
commenters expressed concern about volume, given that a participant, 
beneficiary, or enrollee could request cost estimates for all in-
network providers of a given service, which could be tens of thousands 
of providers, resulting in thousands of pages of results. Some 
recommended a reasonable limit to the volume of information that would 
be provided in response to any single request for a covered item or 
service--for, example, no more than 20 or 25 providers per request.
    Several commenters recommended that the Departments reconsider 
mandating paper responses ``without a fee.'' While these commenters did 
not support charging participants, beneficiaries, or enrollees for 
access to cost-sharing information in general, they asserted that it is 
unreasonable to expect health plans to provide what could easily be 
boxes worth of information in response to multiple requests per 
enrollee.
    Nothing in the proposed rules would have prohibited a plan or 
issuer from providing participants, beneficiaries, or enrollees with 
the option to request disclosure of the information required under 
paragraph (b)(1) of the proposed regulations through other methods 
(such as, over the phone, through face-to-face encounters, by 
facsimile, or by email). The Departments requested comment on these 
proposed disclosure methods, including whether additional methods of 
providing information should be required, rather than permitted. The 
Departments were particularly interested in feedback on whether plans 
and issuers should be required to provide the information over the 
phone, or by email, at the request of a participant, beneficiary, or 
enrollee.
    Several commenters requested alternatives to the paper disclosure, 
particularly a phone option. One commenter recommended the final rules 
require that plans or issuers set up a designated toll-free number that 
participants, beneficiaries, or enrollees can call to receive pricing 
information, in addition to offering that as an option on their main 
consumer information phone line. Two commenters urged the Departments 
to consider making the second form of disclosure one of the plan or 
issuer's choice (that is, paper or phone service). Conversely, one 
commenter stated that the volume and complexity of information that a 
given request could produce would preclude providing this information 
over the phone or in-person. Another commenter recommended the 
alternative format to include telephone, in-person, or fax. One 
commenter recommended emailing digital versions of the paper requests 
to a participant's, beneficiary's, or enrollee's inbox at the 
participant's, beneficiary's, or enrollee's request, and another 
requested that if results were emailed, the same information should not 
also need to be provided via paper form.
    The Departments acknowledge commenters' concerns that the volume of 
paper requests could be unwieldy. To that end, the final rules adopt 
the requirement that cost-sharing information be provided in paper 
form, but a plan or issuer may limit any results for a paper request to 
20 providers per request, as suggested by some commenters. The 
Departments are of the view that the commenters' suggestion of limiting 
paper request to 20 providers per request is a reasonable approach to 
balancing the burdens on plans and issuers with the benefits of 
providing consumers with enough information to be able to compare cost 
and provider options. The final rules provide an additional flexibility 
that, to the extent participants, beneficiaries, or enrollees request 
disclosure by another means (for example, by phone or email), plans and 
issuers may provide the disclosure through the means requested by the 
participant, beneficiary, or enrollee, provided the participant, 
beneficiary, or enrollee agrees that disclosure through such means is 
sufficient to satisfy the request and the request is fulfilled at least 
as rapidly as required for the paper method. The Departments further 
acknowledge that requiring plans and issuers to set up a designated 
toll-free number for pricing information could be beneficial to 
participants, beneficiaries, and enrollees, but are not requiring this 
step given the Departments' view that its burden outweighs its benefit 
in light of the other available disclosure methods, including the 
flexibility to provide this information via the preferred disclosure 
method of the participant, beneficiary, or enrollee.

[[Page 72208]]

3. Special Rule To Prevent Unnecessary Duplication
a. Insured Group Health Plans
    The proposed rules included a special rule to streamline the 
provision of the required disclosures and to avoid unnecessary 
duplication of the disclosures with respect to group health insurance 
coverage. The Departments are finalizing this special rule, which 
provides that, to the extent coverage under a plan consists of fully-
insured group health insurance coverage, the plan satisfies the 
requirements of the final rules if the plan requires the issuer 
offering the coverage to provide the information pursuant to a written 
agreement between the plan and issuer. For example, if a plan and an 
issuer enter into a written agreement under which the issuer agrees to 
provide the information required under the final rules, and the issuer 
fails to provide full or timely information, then the issuer, but not 
the plan, has violated the transparency disclosure requirements.\121\
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    \121\ Under section 4980D(d)(1) of the Code, the excise tax for 
group health plans failing to satisfy the final rules is not imposed 
on a small employer (generally fewer than 50 employees) which 
provides health insurance coverage solely through a contract with an 
issuer on any failure which is solely because of the health 
insurance coverage offered by the issuer.
---------------------------------------------------------------------------

    Many commenters requested that the Departments extend the special 
rule to self-insured group health plans that are administered by an 
administrative service organization or other TPA. These commenters 
stated that self-insured plan sponsors that contract in good faith with 
their TPAs to comply with the reporting requirements should be held 
harmless with respect to compliance obligations and liability under 
this regulation because in many instances a provider network is merely 
rented from a TPA, necessary information may not be held by the plan 
itself, and because liability could be contractually assigned to the 
TPA.
    Section 2715A of the PHS Act provides the authority for the 
Departments to require this information from plans and issuers, but not 
TPAs. Therefore, it is ultimately the responsibility of the plan or 
issuer to provide the information required by the final rules. 
Nonetheless, the Departments note that nothing in the final rules 
prevents a self-insured plan from contracting with another party to 
provide the required disclosure, including, to the extent permitted 
under other Federal or state law, entering into an agreement for the 
other party to indemnify the plan in the event the other party fails to 
make the full or timely disclosure required by the final rules. 
However, the plan must monitor the other party to ensure that the 
entity is providing the required disclosure. Moreover, the Departments 
are of the view that the special rules providing certain safe harbors 
for actions taken in good faith as further described later in this 
preamble provide adequate protections for self-insured plans. The final 
rules also include the addition of the phrase ``insured group health 
plans'' to clarify that this special rule applies to insured group 
plans.
b. Other Contractual Arrangements
    The Departments also received requests for clarification about the 
responsibility of employer plan sponsors that offer benefits under a 
level-funded arrangement. In general, under a level-funded arrangement, 
a plan sponsor self-insures expected claims and purchases stop-loss 
insurance for claims that exceed a specified threshold. Group health 
plans that are offered through a level-funded arrangement are subject 
to the final rules. Just like self-insured plans that are not level-
funded, nothing in the final rules prevents a level-funded plan from 
contracting with another party to provide the required disclosures, but 
the level-funded plan remains liable for compliance with the final 
rules, and must monitor the other party to ensure that the entity is 
providing the required disclosure.
    In several of the comments that addressed the special rule to 
prevent unnecessary duplication, commenters requested that the 
Departments permit plans and issuers to fulfill pricing disclosure 
requirements for prescription drugs through a third-party tool, such as 
a PBM tool. The Departments agree that this approach is permissible 
under the final rules. The Departments recognize that self-insured 
plans may rely on written agreements with other parties, such as PBMs, 
to obtain the necessary data to comply with the disclosure 
requirements. A plan or health insurance issuer may satisfy the 
requirements for prescription drug items and services under paragraph 
(b) by entering into a written agreement under which another party 
(such as a PBM or other third-party) provides the information required 
by paragraph (b) related to prescription drugs in compliance with this 
section. Nonetheless, if a plan or issuer chooses to enter into such an 
agreement and the party with which it contracts fails to provide the 
information in compliance with the final rules, the plan or issuer may 
be held responsible for violating the transparency disclosure 
requirements of the final rules for the same reasons explained above in 
connection with self-insured plans entering into agreements with TPAs.
c. Application to Account-Based Arrangements
    Another commenter sought clarification about the responsibility of 
employer plan sponsors that offer the following types of coverage to 
employees: (1) Individual coverage health reimbursement arrangements 
(HRAs); (2) qualified small employer HRAs (QSEHRAs); and (3) flexible 
spending arrangements (FSAs) that are not fully integrated with group 
major medical coverage, stating that these types of plans were not 
explicitly addressed in the exemptions and the anti-duplication 
provisions outlined in the proposed rules.
    The final rules do not apply to account-based group health plans, 
such as HRAs, including individual coverage HRAs, or health FSAs. 
QSEHRAs are not group health plans and are, thus, not subject to the 
requirements of section 2715A of the PHS Act.\122\ Therefore, these 
types of arrangements are not required to comply with the final rules.
---------------------------------------------------------------------------

    \122\ Section 9831(d)(1) of the Code; section 733(a)(1) of 
ERISA; and section 2791(a)(1) of the PHS Act.
---------------------------------------------------------------------------

4. Privacy, Security, and Accessibility
    The requirements for group health plans and health insurance 
issuers to provide cost-sharing liability estimates and related cost-
sharing information will operate in tandem with existing state and 
Federal laws governing the privacy, security, and accessibility of the 
information that will be disclosed under these disclosure requirements. 
For example, the Departments are aware that the content to be disclosed 
by plans and issuers may be subject to the privacy, security, and 
breach notification rules under HIPAA or similar state laws. Nothing in 
the final rules is intended to alter or otherwise affect plans', 
issuers', and other entities' data privacy and security 
responsibilities under the HIPAA rules or other applicable state or 
Federal laws.
    The Departments also expect that plans and issuers will follow 
applicable state and Federal laws regarding persons who may or must be 
allowed to access and receive the information that is required to be 
disclosed under the final rules. The final rules refer to such persons 
as ``authorized representatives'' and do not establish any new class of 
persons or entities who are authorized

[[Page 72209]]

to access the information specified by the final rules.
    One commenter expressed concerns about potential privacy violations 
related to implementation and compliance with the proposed measure. 
This commenter stated that all entities need to be made aware of their 
existing privacy and data-security responsibilities and that states and 
Federal regulators need to be diligent about compliance and 
enforcement. This commenter further stated it is important to note that 
employers, TPAs, and carriers may incur increased costs related to 
complying with the proposed rules regarding potential data breaches, 
increased liability, and cyber-coverage costs that could impact plan 
premiums.
    The Departments agree that it is important that entities subject to 
the final rules be aware of their privacy and data-security 
responsibilities. Accordingly, the Departments are finalizing, as 
proposed, a provision that reminds plans and issuers of their duty to 
comply with requirements under other applicable state or Federal laws, 
including requirements governing the accessibility, privacy, or 
security of information, or those governing the ability of properly 
authorized representatives to access participant, beneficiary, or 
enrollee information held by plans and issuers.
    The Departments further appreciate the concern that employers, 
TPAs, and issuers may incur cybersecurity costs related to providing an 
online tool that provides some access to participant, beneficiary, and 
enrollee protected health information (PHI). However, given the 
Departments' understanding that as many as 94.4 percent of surveyed 
plans and issuers already maintain and operate an internet-based self-
service tool,123 the Departments anticipate any additional 
costs associated with cybersecurity will not be substantial.\124\ The 
Departments have otherwise evaluated the burden of operating an 
internet-based self-service tool in section VI, later in this preamble.
---------------------------------------------------------------------------

    \124\ Sharma A., Manning, R., and Mozenter, Z. ``Estimating the 
Burden of the Proposed Transparency in Coverage Rule.'' Bates White 
Economic Consulting. January 27, 2020. Available at: https://www.bateswhite.com/newsroom-insight-Transparency-in-Coverage-Rule.html.
---------------------------------------------------------------------------

    One commenter expressed concern that certain requests for cost-
sharing information could include items and services that may reveal 
particularly sensitive health information (for example, information 
related to substance abuse, mental health, or HIV). This commenter 
recommended the Departments provide carve-outs so that plans and 
issuers are not required to disclose such information through unsecured 
methods of communication (for example, email or phone). Alternatively, 
they recommended that the Departments provide more clarity or examples 
of when plans and issuers are not required to disclose certain 
information to comply with HIPAA and other Federal and state privacy 
laws.
    The Departments remind stakeholders that current privacy and 
security requirements applicable under HIPAA rules and other applicable 
Federal requirements continue to apply under these rules. As noted 
earlier in this section of the preamble, the final rules are not 
intended to alter or otherwise affect plans', issuers', or other 
entities' responsibilities under HIPAA or other applicable Federal 
privacy laws. Furthermore, to the extent that state laws are more 
stringent regarding the disclosure of information subject to the final 
rules, plans and issuers are required to comply with the relevant state 
laws. The Departments acknowledge that there have been several recent 
security breaches affecting plans, issuers, and third-party vendors 
that may have compromised the PII and PHI of participants, 
beneficiaries, and enrollees. As acknowledged elsewhere in this 
preamble, privacy and security are important to the Departments and, 
while outside the scope of this rule, these are issues the Departments 
will continue to monitor. In light of existing risks and new risks that 
may arise as a result of increased innovation in the health care space, 
the Departments encourage plans and issuers to continue to educate 
their participants, beneficiaries, and enrollees about these risks and 
about ways to minimize or prevent unintended usage or sharing of their 
health data and encourage consumers to pay close attention to any new 
internet-based tools or applications they may choose to use.

C. Requirements for Public Disclosure of In-Network Rates, Historical 
Allowed Amount Data, and Prescription Drug Pricing Information for 
Covered Items and Services From In- and Out-of-Network Providers

    As explained earlier in this preamble and in the proposed rules, 
the Departments proposed to exercise specific authority under section 
1311(e)(3)(A)(vii) and (ix) of PPACA (as applied to group health plans 
and health insurance issuers in the individual and group markets 
through section 2715A of the PHS Act), which requires plans and issuers 
to publicly disclose information on cost-sharing and payments with 
respect to any out-of-network coverage and any other information the 
Secretary of HHS determines to be appropriate to enhance transparency 
in health coverage. Consistent with this authority, the Departments 
proposed for plans and issuers to make public negotiated rates with in-
network providers and data outlining the different amounts a plan or 
issuer has paid for covered items or services, including prescription 
drugs, furnished by out-of-network providers. The Departments proposed 
to require plans and issuers to make this information available in 
machine-readable files that would include information regarding 
negotiated rates with in-network providers, allowed amounts for all 
covered items or services furnished by particular out-of-network 
providers, and other relevant information in accordance with specific 
method and format requirements. The Departments proposed to require 
plans and issuers to update this information on a monthly basis to 
ensure it remains accurate. The Departments are finalizing these 
policies and requirements with modifications to clarify the proposed 
requirements and underlying policies, and to respond to commenter 
suggestions and concerns.
    The preamble to the proposed rules outlined several reasons why the 
public disclosure of negotiated rates and historical out-of-network 
allowed amounts is both appropriate and necessary for transparency in 
coverage. First, the Departments asserted that the public availability 
of negotiated rates and historical out-of-network allowed amounts would 
empower the nation's 26.1 million uninsured consumers to make more 
informed health care decisions.\125\ Uninsured consumers generally must 
pay a provider's full charges for health care items and services. 
Though negotiated rates will not apply to the uninsured, it will offer 
a baseline when negotiating with providers. Pricing information is 
critical to their ability to evaluate their service options and control 
their health care spending. Uninsured consumers could also use publicly 
available pricing information to find which providers offer the lowest 
price, depending on the consumer's personal needs and priorities. The 
Departments noted in the preamble to the proposed rules that provider 
lists of standard charges often do not reflect the true cost of 
particular

[[Page 72210]]

items and services.\126\ Again, although a provider's negotiated rates 
with plans and issuers do not necessarily reflect the prices providers 
charge to uninsured patients, uninsured consumers could use this 
information to gain an understanding of the payment amounts a 
particular provider accepts for a service. Uninsured patients or 
participants, beneficiaries, or enrollees seeking care from an out-of-
network provider also may use this data to negotiate a price prior to 
receiving an item or service or negotiate down a bill after receiving a 
service.\127\
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    \125\ Income, Poverty and Health Insurance Coverage in the 
United States: 2019.'' United States Census Bureau. September 15, 
2020. Available at: https://www.census.gov/newsroom/press-releases/2020/income-poverty.html.
    \126\ Arora, V., Moriates, C., and Shah, N. ``The Challenge of 
Understanding Health Care Costs and Charges.'' 17 AMA J. Ethics 1046 
(2015). Available at: https://journalofethics.ama-assn.org/article/challenge-understanding-health-care-costs-and-charges/2015-11.
    \127\ ``How to Research Health Care Prices.'' Wall Street 
Journal. Dec. 4, 2009. Available at: https://guides.wsj.com/health/health-costs/how-to-research-health-care-prices/ (``Researching 
health-care pricing online can also help after you've already had a 
medical procedure, if you want to dispute a bill, negotiate it down, 
or figure out if you've been overcharged.'').
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    Second, the Departments stated in the proposed rules that 
information regarding negotiated rates and historical out-of-network 
allowed amounts is critical for any consumer, insured, or uninsured, 
who wishes to evaluate available options for group or individual market 
coverage. Specifically, negotiated rate information for different plans 
or coverage and their in-network providers is key to consumers' ability 
to effectively shop for coverage that best meets their needs at prices 
they can afford, whether the consumer wishes to purchase new coverage 
or change existing coverage. Publicly-available negotiated rate data 
will assist all consumers in choosing the coverage that best meets 
their needs in terms of deductible requirements, coinsurance 
requirements, and out-of-pocket limits--all factors frequently 
determined by plan's or issuer's in-network rates, including negotiated 
rates, or out-of-network allowed amounts. This information, added to 
plan premium information and benefit design (for example coinsurance 
percentages), will give consumers an understanding of how affordable a 
particular coverage option will be.
    In the preamble to the proposed rules, the Departments noted that 
publicly available historical allowed amount data for covered items and 
services provided by out-of-network providers would enable consumers 
who require specialized services to find the best coverage for their 
circumstances. For instance, plans and issuers often place limitations 
on benefits for specialized services, which causes many specialists to 
reject insurance; this can make it difficult, if not impossible, for 
consumers in need of certain services to find in-network providers in 
their area who are accepting new patients or who have sufficient 
availability or expertise to meet their needs. The Departments 
understand, for example, that many speech therapists and pathologists 
do not accept insurance because of the limitations plans and issuers 
place on coverage for their services, such as annual visit limits on 
speech therapy services. Accordingly, consumers who have a need for 
such specialized services may base their coverage choices primarily, if 
not solely, on a plan's or issuer's out-of-network benefits. Historical 
data outlining different amounts paid to out-of-network providers will 
enable consumers who rely on out-of-network providers to ascertain 
potential out-of-network benefits among different plans and issuers.
    Third, the Departments stated in the preamble to the proposed rules 
that public disclosure of pricing information is necessary to enable 
consumers to use and understand price transparency data in a manner 
that will increase competition, potentially reduce disparities in 
health care prices, and potentially lower health care costs. One of the 
recognized impediments to increased competition for health care items 
and services is the widespread lack of knowledge many consumers have 
regarding health care pricing. In the preamble to the proposed rules, 
the Departments noted that many consumers do not fully comprehend the 
basics of health coverage, much less the more complex facets of the 
health care system that can affect an individual's out-of-pocket cost 
for items and services, including: Its specialized billing codes and 
payment processes; the various specialized terms used in plan and 
coverage contracts and related documents (such as copayment and 
coinsurance); and the various billing and payment structures plans and 
issuers use to compensate providers and assign cost-sharing liability 
to individuals (for example, bundled payment arrangements).\128\ 
Pricing information is necessary to spur innovation that will help 
educate consumers on how to get the most value out of their plan or 
coverage. Making the required pricing information public could 
facilitate and incentivize the design, development, and offering of 
internet-based self-service tools and support services that are 
necessary to address the general inability of consumers to use or 
otherwise understand the available health care pricing information.
---------------------------------------------------------------------------

    \128\ Satter, M. ``Survey: Most workers don't understand health 
insurance.'' BenefitsPRO. September 30, 2016. Available at: https://www.benefitspro.com/2016/09/30/survey-most-workers-dont-understand-health-insuran/?slreturn=20190803010341 (a UnitedHealthcare Consumer 
Sentiment Survey found that even though 32 percent of respondents 
were using websites and mobile apps to comparison shop for health 
care, only 7 percent had a full understanding of all four basic 
insurance concepts: Plan premium, deductible, coinsurance, and out-
of-pocket maximum; although 60 percent of respondents were able to 
successfully define plan premium and deductible, respondents were 
not as successful in defining out-of-pocket maximum (36 percent) and 
coinsurance (32 percent)).
---------------------------------------------------------------------------

    In developing the proposed rules, the Departments considered that, 
due to the complexity of the health care system and the data that 
drives plan and issuer payments for health care items and services, 
such raw data is likely to be difficult for the average consumer to 
understand and effectively use. As a result, the Departments determined 
that proposing to make public negotiated rates with in-network 
providers and historical payment data outlining out-of-network allowed 
amounts would be appropriate because it would encourage innovation that 
could ultimately help consumers understand and effectively use price 
transparency information.
    The Departments stated that the proposed requirement to make 
pricing information publicly available could allow health care software 
application developers and other innovators to compile, consolidate, 
and present this information to consumers in a manner that allows 
consumers to consider price as a factor when making meaningful 
comparisons between different coverage options and providers.\129\ For 
instance, third-party developers could develop mobile applications that 
operate as look-up tools and permit comparison of prices for specific 
services across plans. The tools could also allow consumers to access 
their medical records or other information about their health care 
utilization and create estimates based upon patient-specific 
information. Ultimately, the Departments are of the view that improved 
access and usability of this information has the potential to increase 
health insurance literacy, consumerism, and competition, resulting in 
more reasonable costs for health care items and services.
---------------------------------------------------------------------------

    \129\ The Departments recognize that implementation of the API 
discussed in section III, Request for Information, could go even 
further toward the goal of empowering application developers and 
other innovators to support price transparency in the health care 
market.
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    Fourth, in the proposed rules the Departments noted that, along 
with

[[Page 72211]]

consumers, sponsors of self-insured and fully-insured group health 
plans are also disadvantaged by the lack of price transparency.\130\ 
Absent action taken such as through the final rules, health care cost 
trends are expected to continue to outpace inflation, with employer-
sponsored large group plans' annual per employee costs expected to 
increase between 5.5 to 9.0 percent over the next decade.\131\ Without 
information related to what other plans or issuers are actually paying 
for particular items and services, employer plans currently lack the 
pricing information necessary to shop or effectively negotiate for the 
best coverage for their participants and beneficiaries. In the proposed 
rules, the Departments stated that public availability of pricing 
information is appropriate to empower plans to make meaningful 
comparisons between offers from issuers and evaluate the prices offered 
by providers who wish to be included in their pool of in-network 
providers. The Departments noted that the pricing information would 
also assist employer plans that contract with TPAs or issuers to 
provide a network of physicians. That information would provide 
valuable data an employer plan could use to assess the reasonableness 
of network access prices offered by TPAs and issuers by evaluating the 
specific price providers in a TPA's or issuer's network are accepting 
for their services.
---------------------------------------------------------------------------

    \130\ Whaley, C., et al. ``Nationwide Evaluation of Health Care 
Prices Paid by Private Health Plans: Findings from Round 3 of an 
Employer-Led Transparency Initiative.'' RAND Corporation. 2020. 
Available at: https://www.rand.org/pubs/research_reports/RR4394.html.
    \131\ Congressional Budget Office, ``The Budget and Economic 
Outlook: 2019 to 2029.'' Congress of the United States Congressional 
Budget Office. January 2019. Available at: https://www.cbo.gov/system/files/2019-03/54918-Outlook-3.pdf; see also ``Medical cost 
trend: Behind the numbers 2020.'' PwC Health Research Institute. 
June 2019. Available at: https://heatinformatics.com/sites/default/files/images-videosFileContent/pwc-hri-behind-the-numbers-2020.pdf.
---------------------------------------------------------------------------

    Armed with transparency data, employers could also use their 
leverage to negotiate for lower prices for their participants and 
beneficiaries and, potentially, if enough employers take action, it 
could help lower health care prices.\132\ For instance, employers could 
employ network and benefit design tools to move participants and 
beneficiaries toward lower-priced providers and shift from less 
favorable provider contracting models (such as a discounted-charge 
contact, which can be vulnerable to list-price inflation) to more 
favorable, alternative value-based contracting models (such as 
reference-based pricing and bundled payment arrangements).\133\ As 
stated elsewhere in this preamble, based on 2019 Census data, there are 
183 million Americans enrolled in employer-sponsored health coverage 
through a household member's employer at some point during the 
year.\134\ Based on estimates of the United States population in 2019, 
this would mean that more than 56 percent of the nation's insured 
population has employer-sponsored coverage. Therefore, the ability of 
employer plans to effectively negotiate pricing for coverage and 
services could be a boon to competition in the health care market.
---------------------------------------------------------------------------

    \132\ Whaley, C., et al. ``Nationwide Evaluation of Health Care 
Prices Paid by Private Health Plans: Findings from Round 3 of an 
Employer-Led Transparency Initiative.'' RAND Corporation. 2020. 
Available at: https://www.rand.org/pubs/research_reports/RR4394.html.
    \133\ Id.
    \134\ ``Income, Poverty and Health Insurance Coverage in the 
United States: 2019.'' United States Census Bureau. September 15, 
2020. Available at: https://www.census.gov/newsroom/press-releases/2020/income-poverty.html.
---------------------------------------------------------------------------

    Fifth, the Departments stated in the proposed rules that public 
disclosure of price transparency information is also appropriate 
because it could assist health care regulators in carrying out their 
duties to oversee issuers in their states, as well as in designing and 
maintaining sustainable health care programs. Regulators may be able to 
independently access, aggregate, and analyze the data to support 
oversight of plans and issuers. For example, because the machine-
readable files must be updated regularly, regulators could use the 
pricing information to identify trends in rates of items and services 
over time or identify potentially collusive practices or substantial 
price variations within a geographic area that may be in need of 
additional monitoring or future regulatory action. It may also become 
possible for regulators to use the pricing information related to items 
and services to assist in better understanding and monitoring premium 
rate fluctuations and increases in their respective markets; further 
allowing them to assess whether the trend rates issuers use in their 
rate filings are reasonable in order to assess whether proposed rates 
should be approved. Because the in-network applicable rate data will be 
reasonably current, regulators may be able to address potential 
concerns more quickly than at present.
    Local, state, and Federal agencies responsible for implementing 
health care programs that rely on issuers to provide access to care 
would be privy to actual pricing information that could inform their 
price negotiations with issuers. Insights gained from research using 
the pricing information could support regulators in their oversight of 
plans and issuers and could also help identify new ideas for market 
reforms to enhance the performance and efficiency of health insurance 
markets.
    The public availability of health care pricing information offers 
researchers the ability to better understand the impact of specific 
plan, issuer, and provider characteristics on negotiated rates and out-
of-network payments, evaluate and supplement existing models and 
predictions, and formulate new policies and regulatory improvements to 
improve competition and lower health care spending. Researchers have 
already utilized localized and state-wide data to review trends in 
issuer market share, issuer location, and covered services and their 
corollary effects on consumer pricing and experience in the 
market.\135\ They have also examined these similar effects on consumers 
by provider market shares, structures, and offered similar data. 
Expanding the availability of this data could allow for the expansion 
and validation of these and other models and hypotheses. With larger 
and more complete datasets, researchers could refine their policy and 
regulatory suggestions regarding payment and delivery models, including 
those that are most likely to mitigate upwards pricing pressure from 
issuer, provider, consumer, and geographic factors. The release of this 
data could also supplement ongoing efforts to help control health care 
costs.
---------------------------------------------------------------------------

    \135\ See Brown, Z.Y. ``Equilibrium Effects of Health Care Price 
Information.'' The Review of Economics and Statistics. Volume. 101. 
No. 4. September 30, 2019. Available at: https://www.mitpressjournals.org/doi/full/10.1162/rest_a_00765; see also Wu, 
S. et al ``Price Transparency For MRIs Increased Use Of Less Costly 
Providers And Triggered Provider Competition.'' Health Affairs. 
August 2014. Available at: https://www.healthaffairs.org/doi/10.1377/hlthaff.2014.0168.
---------------------------------------------------------------------------

    The Departments acknowledge that these stakeholders, notably 
researchers, may have access to some pricing data through existing 
sources, such as the Health Care Cost Institute (HCCI) and databases 
established through state health care price transparency efforts. 
However, it is the Departments' understanding that these health care 
pricing datasets are often costly to purchase, only contain older, 
historical data, and generally only include de-identified plan data for 
a limited number of plans and issuers who voluntarily participate in 
the data collection.\136\
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    \136\ For example, HCCI is expected to release their ``2.0'' 
dataset in December 2020. The ``2.0'' dataset includes over one 
billion commercial claims and 60 million covered lives per year from 
Aetna, Humana, Kaiser Permanente, and the Blue Cross Blue Shield 
(BCBS) companies from 2012 through 2018. The data is nearly three 
years old and will cost $45,000 annually on a per-project basis and 
does not include other ``standard add-ons,'' such as data mergers. 
Institutional membership prices will be customized for each 
organization. Taken from ``Power Up Your Analytics on the Privately 
Insured.'' Health Care Cost Institute. Available at: https://healthcostinstitute.org/images/pdfs/Health_Care_Cost_Institute_-_Power_Up_Your_Analytics.pdf. In addition to the HCCI dataset, BCBS 
companies also sell their data through their analytics and 
consulting platform, Blue Health Intelligence, with 20.3 billion 
claims from 203 unique member organizations. The access price is not 
listed on their website. More information is available at: https://www.bluehealthintelligence.com/.

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[[Page 72212]]

    By contrast, the pricing information required through the final 
rules would generally be current data for all plans and issuers and 
will be available to the public free of charge. This data, where it is 
related to in-network coverage, can also be tied back to specific plans 
and issuers and the geographic regions in which they provide plans or 
coverage. With access to the pricing data required through the final 
rules, researchers may be able to design new studies that develop novel 
insights into the health insurance markets. Stakeholders, including 
employers, may be able to gain insights, inform oversight efforts, 
negotiate improved terms for items and services, or make improvements 
to insurance products, such as plans and issuers moving toward value-
based plan designs or broadening or narrowing networks based on 
customer shopping habits. The pricing information could also support 
market innovation and improvements by plans and issuers. For example, 
researchers and industry experts could use pricing information to 
establish baseline data to assist in identifying, designing, and 
testing new or existing health care delivery and coverage models.
    While all of these stakeholders stand to benefit from access to the 
pricing information required through the final rules, the Departments 
continue to be of the view that the ultimate beneficiaries of access to 
pricing information are consumers. Indeed, public access to health care 
pricing information could lead to more targeted oversight, better 
regulations, market reforms to ensure healthy competition, improved 
benefit designs, and more consumer-friendly price negotiations.
    The Departments expressed the view that effective downward pressure 
on health care pricing cannot be fully achieved without public 
disclosure of pricing information. Standard economic theory holds that 
markets work best when there is price competition.\137\ When consumers 
shop for services and items based on price, providers and suppliers 
typically compete to lower prices and improve quality.\138\ Based on 
this understanding of standard economic principles and past experience, 
the Departments are persuaded that innovators and other entities in the 
health care market will be incentivized to innovate in the price 
transparency and health care consumerism space once access to pricing 
information that allows for meaningful evaluation of different options 
for delivering health care items or services, coverage options, and 
provider options becomes available.
---------------------------------------------------------------------------

    \137\ ``FTC Fact Sheet: How Competition Works.'' United States, 
Federal Trade Commission. Available at: https://www.consumer.ftc.gov/sites/default/files/games/off-site/youarehere/pages/pdf/FTC-Competition_How-Comp-Works.pdf.
    \138\ Kessler, D., and McClellan, M. ``Is Hospital Competition 
Socially Wasteful?'' 115 Q. J. of Econ. 577. May 2, 2000. Available 
at: https://www.nber.org/papers/w7266.
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1. Information Required To Be Disclosed to the Public
    The Departments are finalizing requirements, under 26 CFR 54.9815-
2715A3(b), 29 CFR 2590.715-2715A3(b), and 45 CFR 147.212(b), for plans 
and issuers to make public applicable rates, including negotiated 
rates, with in-network providers; data outlining the different billed 
charges and allowed amounts a plan or issuer has paid for covered items 
or services, including prescription drugs, furnished by out-of-network 
providers; and negotiated rates and historical net prices for 
prescription drugs furnished by in-network providers.\139\ The 
Departments are of the view that public availability of in-network 
applicable rates, including negotiated rates, billed charges and 
historical out-of-network allowed amounts, and in-network negotiated 
rates and historical net prices for prescription drugs is appropriate 
and necessary to provide comprehensive effective transparency in 
coverage, which may, in turn, empower consumers to make informed 
decisions about their health care, spur competition in health care 
markets, and slow or potentially reverse the rising cost of health care 
items and services.
---------------------------------------------------------------------------

    \139\ As discussed in section II.B of this preamble, the 
Departments are also finalizing requirements under 26 CFR 54.9815-
2715A2(b)(1)(iii)-(iv), 29 CFR 2590.715-2715A2(b)(1)(iii)-(iv), and 
45 CFR 147.211(b)(1)(iii)-(iv) that plans and issuers include 
negotiated rates and out-of-network allowed amounts within the 
internet-based self-service tool.
---------------------------------------------------------------------------

    The vast majority of the commenters agreed with the Departments' 
objectives of price transparency under the proposed rule. Many 
commenters offered general support (in whole or in part) of the 
proposed requirements for public disclosure of in-network negotiated 
rates and out-of-network allowed amounts. One commenter supported the 
public disclosure of out-of-network allowed amounts but expressed 
concerns about disclosure of in-network negotiated rates.
Disclosure of Pricing Information Generally
    Some commenters who offered support stated that the requirements 
will help create more efficient and value-based health care systems by, 
for example, encouraging plans and issuers to adopt innovative benefit 
designs that push patients toward lower-cost care. Another commenter 
who offered support stated that requiring plans and issuers to share 
publicly the negotiated rates for in-network providers and allowed 
amounts for out-of-network providers has the potential to increase 
competition among issuers. One commenter stated that public disclosure 
of negotiated rates is needed to address the provider consolidation 
that is driving up health care costs and leading to more favorable 
reimbursements to large hospitals with bargaining power. Another 
commenter recommended the Departments reject arguments against 
transparency that payment data should be protected as proprietary, and 
adopt a presumption in favor of transparency.
    The Departments received comments from state and local government 
regulators who were supportive of the rules generally and provided 
suggestions for improving the proposals. Regulators recognized that 
greater transparency holds promise in improving pricing of health care 
items and services in ways that improve consumer comprehension and 
policymakers' ability to manage the health care system. One local 
government commenter supported the goal of price transparency, but 
voiced concern that the proposed rules might unintentionally drive up 
the cost of health care. Individual consumers who submitted comments 
offered general support and emphasized the importance of obtaining 
pricing information in advance of receiving health care for their 
personal health care decision-making. Some individual commenters noted 
that consumers seek the price of a product or service in every other 
sector prior to making a spending decision and should be able to do so 
when purchasing health care. Other individual commenters stated their 
support for policies that will help consumers choose whether to seek 
care

[[Page 72213]]

from an in-network or out-of-network provider.
    Many other commenters, comprised largely of health insurance 
issuers and health care providers, offered support for the objective of 
price transparency, but did not support the requirements for public 
disclosure of in-network provider rates and out-of-network allowed 
amounts, expressing particular concerns about the in-network provider 
rate disclosure requirements
    Commenters stated that, as proposed, the disclosure of payer-
specific negotiated rates could distort the markets, creating an 
unbalanced focus on costs at the expense of other factors influencing 
market dynamics, such as quality, efficiency, and effectiveness. Some 
commenters stated that negotiated rates reflect factors other than 
price such as experience, previous volumes/market power, anticipated 
growth, strategic initiatives, and select concessions.
    The Departments do not agree that publication of negotiated rates 
for items and services will have negative distortive effects on health 
care markets. Rather, the Departments are of the view that the final 
rules will help to counteract the recognized price distortions that 
result from the unavailability of pricing information to health care 
consumers.\140\ As discussed elsewhere in this preamble, the current 
unavailability of pricing information for health care items and 
services prohibits the health care markets from achieving a meaningful 
level of competition based on price because it ensures that health care 
consumers typically are not able to include price in their health care 
purchasing decisions. The Departments are of the view that making 
pricing information available could begin to ameliorate price 
distortions in health care by encouraging consumer decision-making that 
takes cost into account.
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    \140\ Under ideal market conditions, consumers have sufficient 
information to make good choices. When consumers do not have 
information on price, standard market forces cannot operate, and 
prices for health care are distorted resulting in price 
discrimination (charging consumers different prices for the same 
product) and other problems that currently plague the health care 
markets. See generally Mwachofi, Ari, and Assaf F. Al-Assaf. 
``Health care market deviations from the ideal market.'' Sultan 
Qaboos University Medical Journal vol. 11, 3 (2011): 328-37. 
Available at https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3210041/.
---------------------------------------------------------------------------

    Another commenter stated that the release of negotiated rates would 
inappropriately result in the steering of consumers to particular 
providers based on contractual prices. The commenter stated that 
informed decision-making is not solely based on price, but is multi-
factorial, involving looking at a provider's clinical expertise, 
ability to coordinate care, quality, effectiveness of utilization 
management, and guidance from a referring physician. The Departments 
agree that informed decision-making is not solely based upon price. The 
final rules are only one part of the solution to address issues 
contributing to the lack of competition in the health care market and 
resulting increases in health care costs. While the Departments address 
the problem of price transparency through this rulemaking, other 
government and industry stakeholders are working to address other 
issues highlighted by commenters, such as the availability of reliable 
quality data.
    The Departments, in shaping the proposed and final rules, 
considered that there is quality data available to individual consumers 
and other consumers of health care like employers and government 
programs. Various government and industry stakeholders sponsor programs 
that aim to provide reliable health care quality information to health 
care purchasers. For instance, HHS engages in continual efforts to 
develop quality measures that are meaningful and accurately reflect 
hospital quality. CMS's Hospital Inpatient Quality Reporting Program 
collects quality data from certain hospitals with the goal of driving 
quality improvement through measurement and transparency.\141\ CMS 
publicly displays this quality data to help consumers make more 
informed decisions about their health care.\142\ HHS's Agency for 
Healthcare Research and Quality (AHRQ) publishes comparative 
information on health plans that include reports sponsored by Federal 
and state agencies, private organizations, and purchasing 
coalitions.\143\ The Departments appreciate comments received through 
the RFI in the proposed rule and are also evaluating future actions to 
help ensure quality information is more readily available.
---------------------------------------------------------------------------

    \141\ See CMS Hospital inpatient Quality Reporting Program web 
page at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/HospitalRHQDAPU, last 
accessed Sep. 21, 2020.
    \142\ CMS Hospital Compare website at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/HospitalRHQDAPU, last accessed Sept. 21, 2020.
    \143\ AHRQ Comparative Reports on Health Plans, https://www.ahrq.gov/talkingquality/resources/comparative-reports/health-plans.html, last accessed Sept. 21, 2020.
---------------------------------------------------------------------------

    The Departments are also of the view that it is worth noting that 
private sector entities have been working to provide useful quality 
information to consumers.\144\ For example, the National Quality Forum 
(NQF) is a private standard-setting organization focused on the 
evaluation and endorsement of standardized performance measurements 
that makes available on its website all NQF work products, reports, and 
quality measures.\145\ As another example, the Joint Commission is a 
not-for-profit organization that develops and applies standards that 
focus on patient safety and quality of care.\146\ Finally, the National 
Committee for Quality Assurance (NCQA) measures and accredits health 
plans as well as the quality of medical providers and practices. For 
example, more than 191 million people are enrolled in health plans that 
report quality results using NCQA's Healthcare Effectiveness Data and 
Information Set (HEDIS),\147\ which includes more than 90 measures 
across six ``domains of care,'' including effectiveness of care, 
access/availability of care, and experience of care.\148\
---------------------------------------------------------------------------

    \144\ See, for example, Ranard, B.L., Werner, R.M., 
Antanavicius, T., Schwartz, H.A., Smith, R.J., Meisel, Z.F., Asch, 
D.A., Ungar, L.H., & Merchant, R.M. (2016). ``Yelp Reviews Of 
Hospital Care Can Supplement And Inform Traditional Surveys Of The 
Patient Experience Of Care. Health Affairs'' (Project Hope), 35(4), 
697-705. Available at: https://doi.org/10.1377/hlthaff.2015.1030 
(``Online consumer-review platforms such as Yelp can supplement 
information provided by more traditional patient experience surveys 
and contribute to our understanding and assessment of hospital 
quality.'').
    \145\ See the National Quality Forum website, http://www.qualityforum.org/how_we_do_it.aspx, last accessed Oct. 8, 2020.
    \146\ See The Joint Commission website, https://www.jointcommission.org/about-us/facts-about-the-joint-commission/joint-commission-faqs/, last accessed Oct. 8, 2020.
    \147\ See NCQA website, https://www.ncqa.org/hedis/, last 
accessed Oct. 8, 2020.
    \148\ Id.
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    Once pricing data is available through the final rules, existing 
quality data can be considered with pricing data to produce a more 
complete and accurate picture of total value. The same third-party 
developers who will have access to the information published pursuant 
to these final rules could develop platforms capable of presenting 
available quality data alongside pricing information. The Departments, 
therefore, anticipate that making health care prices transparent may 
spur consumers to seek and consider available quality and price 
information to determine whether a particular item or service is worth 
a higher or lower price. There is evidence from retail sector studies 
showing that consumers want high-quality, low-priced goods and will 
seek the lower price among

[[Page 72214]]

products of the same quality.\149\ Given the high cost of health care, 
the Departments are of the view that the same trend toward seeking 
lower prices will more likely than not hold true in the health care 
market when prices become transparent.\150\
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    \149\ Shirai, M. ``Impact of `High Quality, Low Price' Appeal on 
Consumer Evaluations.'' Journal of Promotion Management. December 
2015. Available at https://www.tandfonline.com/doi/full/10.1080/10496491.2015.1088922.
    \150\ Recent research evaluating the impact of New Hampshire's 
price transparency efforts shows that providing insured patients 
with information about prices can have an impact on the out-of-
pocket costs consumers pay for medical imaging procedures, not only 
by helping users of New Hampshire's website choose lower cost 
options, but also by leading to lower prices that benefited all 
patients, including consumers in New Hampshire that did not use the 
website. See Brown, Z.Y. ``Equilibrium Effects of Health Care Price 
Information.'' The Review of Economics and Statistics. Volume. 101. 
No. 4. Available at: https://www.mitpressjournals.org/doi/full/10.1162/rest_a_00765; see also Brown, Z.Y. ``An Empirical Model of 
Price Transparency and Markups in Health Care.'' August 2019. 
Available at: http://www-personal.umich.edu/~zachb/
zbrown_empirical_model_price_transparency.pdf.
---------------------------------------------------------------------------

    The Departments received many comments stating that publishing 
negotiated rates is unlikely to meet the Departments' goal of helping 
consumers understand their health coverage and reasonably predict their 
out-of-pocket costs. Many of these commenters stated that negotiated 
rates information would not provide consumers with meaningful, 
actionable pricing information, and could possibly make purchasing 
decisions more confusing and difficult for consumers. One commenter 
noted that the public disclosure of negotiated rate information could 
distract from relevant participant, beneficiary, or enrollee-specific 
cost-sharing information such as accumulated amounts. One commenter 
stated that confusing and unhelpful pricing information would erode 
consumer trust and present long-term challenges for the health care 
system.
    The Departments disagree that public knowledge of the price of 
health care items and services will increase individual consumers' 
confusion regarding health coverage or distract them from other 
information relevant to their out-of-pocket costs, such as the status 
of their accumulated amounts and note that commenters who raised this 
point cited no empirical or anecdotal evidence supporting these 
concerns. On the contrary, as explained throughout this preamble, the 
Departments are of the view that standard economic theory, experience 
from several states, and evidence from other markets demonstrate that 
increased transparency leads to better-informed purchasing decisions, 
generally lower prices, and quality improvements. Moreover, the 
Departments expect that third-party developers will compete to make 
pricing information available to the public in formats that are user-
friendly, so disclosure of detailed pricing information is unlikely to 
lead to significant consumer confusion.
    As noted earlier in this preamble, the Departments expect the 
public disclosure of pricing information related to health care items 
and services to help both uninsured and insured individuals in their 
health care and health coverage purchasing decisions. Furthermore, 
research suggests that having access to pricing information can 
increase consumers overall satisfaction and provide opportunities for 
education and engagement on health care pricing.\151\ For instance, 
when the Children's Hospital of Philadelphia incorporated a Patient 
Cost Estimate Department, they found that cost estimates resulted in 
``fewer billing-related complaints, decreased revenue losses, and 
increased overall patient satisfaction.'' \152\ A targeted study in the 
American Surgeon journal found five out of six medical centers that 
adopted price transparency reported increases in patient satisfaction 
and patient engagement after price transparency.\153\
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    \151\ Revere, F.L., et al. ``A consumer-based evaluation of 
Healthcare Price and Quality Transparency.'' Journal of Health Care 
Finance. Summer 2016. Available at: http://www.healthfinancejournal.com/index.php/johcf/article/download/72/74.
    \152\ Otero, H., et al. ``The Cost-Estimation Department: A Step 
Toward Cost Transparency in Radiation.'' Journal of the American 
College of Radiology. Vol 16. Issue 2. February 2019. Available at: 
https://doi.org/10.1016/j.jacr.2018.07.033.
    \153\ Mehta, A., et al. ``The Impact of Price Transparency for 
Surgical Services.'' The American Surgeon. April 2018. Available at: 
https://pubmed.ncbi.nlm.nih.gov/29712614/.
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    One commenter stated that public disclosure of pricing information 
through the machine-readable files is unlikely to benefit uninsured 
consumers, in particular, as it will be difficult for them to make the 
necessary comparisons or negotiate with providers as providers are not 
incentivized to negotiate with uninsured consumers. Another commenter 
stated that the machine-readable files would not be very helpful for 
current beneficiaries, participants, or enrollees, but acknowledged 
they could benefit uninsured individuals and enrollees considering 
alternative coverage.
    By contrast, other commenters, including many individual 
commenters, stated that access to negotiated rate information would 
empower both insured and uninsured consumers by helping to correct the 
lack of consumer choice and information and help support efforts by 
other market actors. In particular, one commenter stated that consumers 
would likely use the pricing information, especially if their cost-
sharing liability is in the form of coinsurance that is tied to the 
negotiated rates. One commenter stated that release of information on 
negotiated rates would help consumers by spurring innovation by third-
party application developers to create tools to help consumers and 
payers, especially self-insured group health plans. Finally, one 
commenter did not support the requirements for public disclosure of in-
network provider rates but did acknowledge that public disclosure of 
de-identified aggregated data for both in-network and out-of-network 
providers could empower consumer decision-making.
    The Departments agree that transparency would help provide more 
consumer information and support consumer choice for both insured and 
uninsured consumers. The Departments continue to be of the view that 
market actors, including IT developers, researchers, industry experts, 
and plans and issuers would be incentivized to innovate in the price 
transparency and health care consumerism space once access to the 
pricing information required to be disclosed through the final rules 
becomes available. In the proposed rule, the Departments emphasized 
that individual consumers need easy to use tools and resources to help 
them better understand their current health care coverage, health 
coverage they consider purchasing, and their out-of-pocket exposure 
under those plans. Health care stakeholders and other industry 
participants, including web and mobile application developers, are 
already attempting to meet this need, despite the incomplete pricing 
information available to them. Given actionable data that can improve 
such tools and resources, industry actors will likely be incentivized 
to design innovations to deliver the help and information consumers 
need to make informed health care decisions based, at least in part, on 
the important factor of price. The final rules will support current and 
future efforts to help guide consumers to the lowest cost items and 
services that meet their specific needs and qualifications. To spur 
this innovation, the pricing information must allow for meaningful 
evaluation of different options for delivering health care items or 
services, coverage options, and provider options. One of the main 
avenues through which

[[Page 72215]]

the Departments assumed this innovation would materialize is through IT 
developers who could be incentivized to design and make available 
internet-based tools and mobile applications that could guide consumers 
in accessing available price information; as well as researchers who 
would have the ability to analyze health care pricing at local and 
national levels and provide the public with their findings. Industry 
experts and plans and issuers would also have the ability to use 
pricing information to develop innovative plan benefit designs that 
could result increased competition and cost savings. Based on comments 
received from interested IT developers and other innovators, the 
Departments continue to believe many innovators are interested in 
utilizing this pricing information, once available, to spur innovation 
in the health care space, as intended. The Departments expect internet-
based tools and mobile applications will increase the likelihood that 
both insured and uninsured consumers will be able to use the 
information to make informed health care purchasing decisions. And, as 
stated by a commenter, the information required to be made public 
through the proposed rules would help reduce wasteful spending because 
it would support efforts by employers, state regulators, and other 
purchases of health care to evaluate prices and identify unwarranted 
spending variation. Therefore, the Departments did not intend or expect 
that behavioral changes emanating from public disclosure of this 
information will be limited to consumers but will benefit a variety of 
stakeholders.
    The goals the Departments seek to achieve through these 
requirements for public disclosure are not mutually exclusive. The 
Departments expressed a desire to bring about an outcome where 
innovators, including researchers, would enter or expand in the health 
care purchasing space to develop tools, applications, and public 
information that would support consumer decision-making. Thus, the 
Departments disagree with commenters who argued that public disclosure 
of negotiated rates would not support consumer decision-making.
    The Departments disagree with commenters who suggested that pricing 
information presented through the public disclosures would be confusing 
and misleading to consumers and could erode consumer trust and present 
long-term challenges for the health care system. Based on the review of 
the over 25,000 comments received on the proposed rules, the vast 
majority of which were submitted by individuals, consumer trust in the 
health care system is already quite low, due in substantial part to the 
opacity of health care pricing.\154\ In one study of a nationally 
representative sample, researchers found that participants often 
believed that providers and issuers set prices that do not reflect 
either the quality or the cost of goods and services, contributing to 
the study's conclusion that most Americans do not perceive the price 
and quality of health care to be associated. Study participants 
described prices as both too high and irrational, noting that prices 
varied within their regions for unknown reasons.\155\ The Departments' 
transparency efforts are meant to increase transparency of health care 
pricing information. The Departments do not agree that this information 
would further frustrate consumers compared to the status quo, even if 
it is difficult to navigate for the average consumer without the use of 
internet-based tools or applications.
---------------------------------------------------------------------------

    \154\ See, for example, Phillips, K.A., Schleifer, D., and 
Hagelskamp, C. ``Most Americans Do Not Believe That There Is An 
Association Between Health Care Prices And Quality Of Care.'' Health 
Affairs. 2016. Available at https://www.healthaffairs.org/doi/pdf/10.1377/hlthaff.2015.1334.
    \155\ Id.
---------------------------------------------------------------------------

    One commenter stated that disclosure of negotiated rates could harm 
the ability of health issuers to reward high performing providers with 
higher reimbursements. Additionally, some commenters noted that focus 
on price could particularly harm small health plans and TPAs who may 
have been able to negotiate discounted rates by offering health plans 
in a limited service area.
    The Departments understand that requiring release of this pricing 
information may impact commercial arrangements and result in certain 
one-time and ongoing administrative costs, which could 
disproportionately affect small group plans, TPAs, and issuers offering 
coverage in the small group market. However, the Departments view 
making this information available to consumers and the public as 
beneficial to the public's long-term interests in facilitating a 
consumer-oriented, information-driven, and more competitive market. In 
addition, as discussed below, the Departments are establishing several 
special rules for streamlining the provision of public disclosures 
required through the final rules. These special rules will help 
mitigate the concerns of small group plans and issuers by allowing them 
to leverage a contractual relationship through an issuer or 
clearinghouse to satisfy the public disclosure requirements of the 
final rules.
    Several commenters submitted feedback on how disclosures in the 
proposed rules could affect contractual arrangements. One commenter 
expressed the view that the requirement to release negotiated rates 
threatens contracts negotiated between two private entities. Several 
commenters submitted comments related to gag clauses or non-disclosure 
agreements contained in provider contracts as well as other contract 
terms that are often included in contracts between providers and payers 
(such as anti-steering and anti-tiering provisions) that may limit the 
ability of third parties to use the data. Gag clauses, which also may 
be referred to as non-disclosure agreements, are terms that are often 
included in provider-payer contracts, which prohibit one or both 
parties from making public the negotiated rates therein.\156\ Anti-
steering and anti-tiering provisions are terms that may be included in 
provider-payer contracts (usually between issuers and hospital 
systems), which prohibit the plan or issuer from directing 
participants, beneficiaries, or enrollees toward higher-quality or 
lower-cost providers, and require that all providers associated with 
the contracting provider (for example, for a hospital system this could 
include hospitals, other affiliated facilities, and physicians) to be 
placed in the most favorable tier of providers.\157\
---------------------------------------------------------------------------

    \156\ ``Provider Contracts.'' The Source on Healthcare & Price 
Competition, UC Hastings College of Law. Available at: https://sourceonhealthcare.org/provider-contracts/.
    \157\ Id.
---------------------------------------------------------------------------

    One commenter stated that if the Departments do not fully address 
the implications of non-disclosure agreements in provider and payer 
contracts, legal complications could arise from payers attempting to 
meet the requirements to disclose negotiated rates and violating these 
agreements in the process. Another commenter strongly supported 
revisions to the proposed rules to address the barriers associated with 
gag clauses. To address this issue, another commenter recommended the 
Departments provide that the final rules supersede any provider 
contract gag clause to the extent the final rules conflict with current 
or future contractual language.
    The Departments understand that this requirement may require 
alterations to some existing contracts. For example, payers and 
providers may need to remove contract terms that conflict with the 
requirement to disclose negotiated

[[Page 72216]]

rates such as gag clauses or non-disclosure agreements.\158\ It is not 
uncommon for new or modified regulatory requirements or new statutory 
provisions to alter private contractual arrangements such as those 
between a health insurance payer and health care provider. Because 
changes in law or statute that may need to be reflected in payer-
provider contracts is not uncommon, the Departments expect that 
providers and payers have processes in place address to these 
requirements of the final rules. Often, the possibility that that new 
or modified regulatory requirements or new statutory provisions could 
alter such contracts is contemplated by the contracts themselves; for 
example, drafters may include contract language that indicates terms 
may be altered by changes in law or regulation. Such language would 
obviate the need for updates outsides of the regular contracting 
schedule.
---------------------------------------------------------------------------

    \158\ The Departments note that gag clauses that would prohibit 
a pharmacy from informing a participant, beneficiary, or enrollee of 
any differential between that individual's out-of-pocket cost under 
the coverage option offered by his or her plan or issuer regarding 
acquisition of the drug and the amount that individual would pay 
without using any health plan or health coverage are already 
prohibited. See Sec. 2729 of the PHS Act.
---------------------------------------------------------------------------

    As a general matter, the onus for ensuring a contract provision 
does not violate applicable law rests with the parties to the contract. 
Nothing in the final rules prevents providers and payers from 
implementing contract revisions to ensure terms are not in conflict 
with the requirements of the final rules. Because the Departments are 
of the view that prescription or prohibition of specific contract terms 
or language in payer-provider contracting is not necessary, the 
Departments leave it to plans, issuers, and providers to avoid contract 
terms that would prohibit or frustrate either party's compliance with 
the final rules.
    Many commenters who did not support the requirements for public 
disclosure of in-network provider rates and out-of-network allowed 
amounts requested that the Departments withdraw the proposed rules or 
otherwise work with stakeholders to develop policy solutions that meet 
consumer needs with less burden and guard against potential unintended 
consequences. Some commenters suggested the Departments collect more 
data about the potential impacts of public disclosure of negotiated 
rates to ensure the policy is modified, if needed, to protect against 
the risk of unintended consequences, noted earlier. One commenter 
suggested the Departments pilot the requirement for public disclosure 
of negotiated rates. Another commenter recommended the Departments 
pilot the release of negotiated rates in a state where there are a few 
small carriers to gain a clearer understanding of potential 
consequences of the public disclosure requirements. Another commenter 
recommended the Departments pilot full price transparency in several 
markets and conduct longitudinal studies on the impacts.
    Some commenters suggested the Departments refocus transparency 
efforts to already existing solutions or different initiatives. Some 
commenters recommended that the final rules require plans and issuers 
to send claims data to the HCCI to ensure that health care cost data 
reaches the public domain through researchers without disclosing 
confidential information or distorting the market. A few commenters 
suggested the Departments leverage existing data sources such as all-
payer claims databases to promote transparency goals. One commenter 
stated the Administration should support congressional and states' 
efforts to pursue and expand upon transparency efforts, including 
through all-payer claims databases.
    The Departments appreciate both private and public transparency 
efforts already underway. In the development of the proposed and final 
rules, the Departments sought feedback from industry and other 
stakeholders. While the Departments agree that expanding data sent to 
HCCI will help researchers gain a better understanding of market 
dynamics, the Departments are of the view that health care pricing data 
should be coupled with plan and issuer information. If the information 
were to be decoupled, as through HCCI or in an all-payer claims 
database, it would not provide the degree of transparency in prices 
needed to effectuate the objectives the Departments seek to achieve 
through the final rules. For example, pricing data, decoupled from plan 
and issuer data, would not provide actionable information to consumers 
that seek to evaluate health coverage options, as they would not be 
able to connect pricing to specific plans.
    The Departments view the disclosure requirements set forth in the 
final rules as complementary to and supportive of state-level efforts. 
States act as incubators for transparency efforts. Nothing in the final 
rules precludes states from continuing to establish and run state-level 
transparency efforts. Indeed, the Departments intend for state 
regulators to be able to use the disclosures required to be made public 
through the machine-readable files to support their oversight of health 
insurance markets, including supporting their own state-level 
transparency efforts such as all-payer claims databases. However, the 
Departments are also aware that there are limits to the pricing 
information that states can obtain through state-level transparency 
efforts. For instance, states are not able to obtain pricing 
information from self-insured group health plans; the final rules will 
help states obtain this information.
    The Departments further maintain that the final rules are 
significantly more likely to achieve positive results for consumers and 
health care markets than they are likely to result in the potential 
negative consequences outlined by certain commenters. The Departments 
are of the view that traditional market forces that affect prices in 
any market, including competition between providers; the threat of new 
market entrants that offer quality, lower cost services; and the 
increased bargaining power of consumers will be supported by the final 
rules. The Departments also are of the view that providers who choose 
to arbitrarily or unreasonably increase their prices based on publicly-
available negotiated rate data are more likely to damage their own 
competitive positions and reputation than they are to cause widespread 
health care cost increases in their particular markets. For these 
reasons, the Departments remain confident that the final rules' 
requirements for disclosure of negotiated rate information will benefit 
health care consumers by giving them information necessary to 
effectively shop for and choose the health care coverage and providers 
that fit their needs and budgets. As consumers make more informed 
choices, based on available price data, market forces will have a 
chance to operate and potentially correct the current course of 
unsustainable increases in health care costs.
    In light of the Departments' commitment to health care price 
transparency and the importance of addressing the distortive effects of 
the absence of pricing information, the Departments are not convinced 
there is a need to change the policies in the final rules to mitigate 
the risk of unintended consequences or violations of law such as price 
fixing and collusion among providers. As discussed elsewhere in this 
preamble, research, academic literature, and the experience of various 
state efforts have provided support for the Departments' conclusion 
that the public availability of in-network rate

[[Page 72217]]

information is substantially more likely than not to lead to more 
informed health care choices, increased competition, and lower prices.
    The Departments note that price transparency is not a novel 
concept, even in health care pricing. Several states, including New 
Hampshire and Maine, have implemented state-level price transparency 
efforts. While the Departments acknowledge that these state efforts 
differ in material ways from the disclosure requirements of the final 
rules, the same underlying principle of price transparency that 
undergirds state efforts also undergirds the final rules. These state 
efforts provide evidence that transparency at a more localized 
geographic level does not result in the extreme unintended consequences 
postulated by some commenters. The Departments acknowledge that other 
national health policy initiatives are sometimes tested through pilots; 
however, the Departments are of the view that such an approach is not 
necessary for price transparency, in part, because there is already 
evidence through state initiatives that price transparency is 
achievable.
    The proposed and final rules reflect the Departments' conclusion 
that an expansive implementation of these requirements will be the most 
effective manner in which to reasonably ensure that the impact will be 
spread across all markets, rather than isolated to particular 
geographic areas, markets, or groups of consumers. The goal of the 
final rules is to expand access to price transparency information among 
the public, which will not be realized without an expansive 
implementation. The Departments are concerned that if pricing 
information for group health plans and insurance in the individual and 
group markets is not made available to the public or is made public in 
a piecemeal fashion, there will be little incentive for health care 
researchers, third-party application developers, or other industry 
actors to invest scarce resources into a tool that will only offer 
regional or otherwise limited pricing data. Other stakeholders, such as 
researchers and regulators, would also find incomplete pricing 
information less useful to their efforts to better understand, better 
oversee, and develop innovations in the health care markets. Finally, 
the Departments are concerned that limiting the implementation of this 
rule, by scope or by geographic market area, will limit the impact for 
the millions of consumers (both individuals and employers) who are 
expected to benefit from the public disclosures required through the 
final rules. Consumers located in a geographic market where data would 
not be made available under a more limited requirement would not 
experience any benefit from the availability of actionable pricing 
information in other markets. Even those consumers located in 
geographic markets where pricing information would be made available 
under a more limited requirement would likely experience more limited 
benefits than with a market-wide requirement to release pricing 
information because these consumers would likely not have access to 
tools developed by third-party application developers. These consumers 
would also be less likely to experience downstream benefits from 
contributions expected from other stakeholders, such as researchers and 
regulators.
    In addition to establishing a preference for establishing market-
wide rules, in the preamble to the proposed rules, the Departments 
explained the importance of timely action to increase 
transparency.\159\ The Departments observed that continuously rising 
health care costs and increases in out-of-pocket liability, without 
transparent, meaningful information about health care pricing, have 
left consumers poorly equipped to make cost-conscious decisions when 
purchasing health care items and services. In addition, consumers 
across all markets should come to expect and receive the same access to 
standardized pricing information and estimates. This broader 
applicability also has the greatest potential to reform health care 
markets. The Departments recognized the need for a faster and nimbler 
approach to addressing the pressing issue of rising health care prices. 
For these reasons, the Departments are of the view that a pilot 
approach in a specific geographic area or an otherwise phased-in 
approach for the requirement to publicly disclose negotiated rates 
through the machine-readable files would not be sufficient to meet the 
requirement for transparency in coverage.
---------------------------------------------------------------------------

    \159\ 84 FR 65464, 65465 (Nov. 27, 2019).
---------------------------------------------------------------------------

    Because the Departments have determined a need for an expansive 
implementation of transparency in coverage requirements, and for the 
reasons discussed at length in response to public comments, the final 
rules adopt the requirement to publicly disclose negotiated rates for 
all group health plans and individual and group market issuers, 
regardless of geographic market.
Scope of Pricing Information To Be Made Publicly Available
    Several commenters explicitly supported public disclosure of 
negotiated rates and out-of-network allowed amounts for all items and 
services. However, other commenters recommended the Departments limit 
the items and services to only the most common items and services or a 
narrow set of shoppable services in order to make the machine-readable 
files more meaningful to consumers. Another commenter did not support 
the negotiated rate disclosure proposals, but acknowledged that 
disclosure of rates for a subset of shoppable services would be 
manageable, could allow issuers to account for innovative payment 
arrangements, and could be used to gather empirical evidence on the 
impact of transparency on the health care markets.
    The Departments understand that requiring plans and issuers to 
include all items and services in the machine-readable files could 
produce large data sets that could be cumbersome and may be costlier to 
maintain than a more limited file of shoppable services. However, the 
Departments are of the view that release of this information for all 
items and services, as proposed, is crucial for advancing the key 
objectives of the final rules to spur innovation, increase competition, 
and empower consumer activities in the health insurance markets. The 
Departments are of the view that limiting the data in the machine-
readable files would undermine efforts to achieve these objectives. In 
particular, the Departments are concerned that if the requirement were 
to be modified to apply to only a shoppable subset of items and 
services, then third-party application developers may not be as 
interested in innovating in this area.
    Furthermore, the Departments are of the view that efficiencies will 
be gained after initial development of these files. Although the 
initial implementation burden for some plans and issuers may be 
sizeable, future releases of data could be automated, greatly reducing 
the burden in subsequent years.
    One commenter stated the type of data being required to be 
disclosed is prohibited from disclosure by CMS for laboratory services 
under section 1834A of the SSA, which requires CMS to keep confidential 
payer rates reported by applicable laboratories. The commenter stated 
section 1834A of the SSA should also apply to disclosure of similar 
information by health plans.
    Section 1834A of the SSA is applicable to reporting of private 
sector

[[Page 72218]]

payment rates for the limited purpose of establishing Medicare 
reimbursement rates for laboratory services. Section 1834A protects the 
confidentiality of information disclosed to HHS by a laboratory and 
prohibits the Secretary of HHS or a Medicare contractor from disclosing 
the information in a manner that identifies the particular payer or 
laboratory, identifies the prices charged, or identifies the payments 
made to any such laboratory notwithstanding any other provision of law. 
The confidentiality protections of the data required to be disclosed to 
HHS under section 1834A protects laboratories and payers from re-
disclosure by HHS and Medicare contracts. These protections are not 
applicable to the public disclosures required under the final rules. 
First, the final rules require plans and issuers to publicly disclose 
in-network providers' negotiated rates and out-of-network providers' 
allowed amounts for all covered items and services. These disclosures 
must be made through machine-readable files posted in a public location 
on a plan or issuer's website. HHS or contractors of HHS will have no 
active role in publicizing the information required to be public 
through the final rules. Second, the confidentiality requirements in 
section 1834A are applicable ``notwithstanding any other provision of 
law.'' The public disclosure requirements in the final rules are being 
finalized through an exercise of specific authority under section 
1311(e)(3)(A)(vii) and (ix) of PPACA (as applied to plans and issuers 
in the individual and group markets through section 2715A of the PHS 
Act). Even if the public disclosures were to be subject to section 
1834A of the SSA, the confidentiality provision of section 1834A would 
not be applicable because the public disclosure requirements 
established under the final rules are required by an exercise of 
authority under a separate provision of law. For these reasons, and 
because laboratory services fall within the scope of all covered items 
and services, the final rules clarify that disclosure by plans and 
issuers of pricing information for laboratory services is required 
under the final rules.
    As discussed earlier in this preamble, the Departments are 
modifying the proposed requirements relating to inclusion of all items 
and services in the internet-based self-service tool. For the internet-
based self-service tool, 26 CFR 54.9815-2715A2, 29 CFR 2590.715-2715A2, 
and 45 CFR 147.211 adopt a phased-in approach under which plans and 
issuers are required to include only include a subset of items and 
services during the initial year of implementation. However, plans and 
issuers will still eventually be required to include all covered items 
and services in their internet-based self-service tools in order to 
meet the requirements of the final rules. The Departments are of the 
view that a similar phased-in approach for the machine-readable files 
is not necessary and would not support the achievement of the goals of 
the final rules.
    For these reasons, the final rules adopt, as proposed, the 
requirement to include all covered items and services, including 
prescription drugs, in the public disclosures required to be made 
through the machine-readable files.
    One commenter made the point that in order to provide meaningful 
transparency to consumers, as well as to address the issues of 
inconsistent pricing among hospitals in particular, the Departments 
should require public disclosure of data related to pricing in addition 
to the negotiated rate. The commenter stated the data elements should 
include the following: Number of procedures performed by the provider 
in the reported period, number of bed days, total billed charges in the 
reporting period, total amount received/paid for services in the 
reporting period, mean billed charged amount, mean accepted amount, 
median billed charged amount, mean accepted amount, median billed 
charged amount, median accepted payment, minimum billed charged amount, 
maximum billed charged amount, minimum accepted payment, and maximum 
accepted payment.
    A goal of the final rules is to provide transparency for all 
covered health care items and services. To this end, the final rules' 
public disclosures are tailored to require only certain critical 
pricing information that the Departments view as most likely to achieve 
this goal, while minimizing the burdens for plans and issuers of 
producing and maintaining the information. Requiring additional data 
elements, such as those listed by the commenter, would introduce an 
increased level of complexity to the machine-readable files and 
increase the burden of making the public disclosures.
    Additionally, the Departments are of the view that it would be 
unnecessarily burdensome to isolate hospital pricing information for 
additional disclosure when hospitals already have separate price 
transparency disclosure obligations. As discussed elsewhere in this 
preamble, the Hospital Price Transparency final rule requires hospitals 
to make public their standard charges for items or services they 
provide.\160\ The Hospital Price Transparency final rule requires 
disclosure of five types of standard charges:
---------------------------------------------------------------------------

    \160\ 84 FR 65524 (Nov. 27, 2019).
---------------------------------------------------------------------------

     The gross charge (the charge for an individual item or 
service that is reflected on a hospital's chargemaster absent any 
discounts);
     the discounted cash price (the charge that applies to an 
individual who pays cash, or cash equivalent, for a hospital item or 
service);
     the payer-specific negotiated charge (the charge that a 
hospital has negotiated with a third-party payer for an item or 
service);
     the de-identified minimum negotiated charge (the lowest 
charge that a hospital has negotiated with all third-party payers for 
an item or service); and
     the de-identified maximum negotiated charge (the highest 
charge that a hospital has negotiated with all third-party payers for 
an item or service).
    The Departments are of the view that the public disclosure 
requirements for hospitals under the Hospital Price Transparency final 
rule, in combination with the public disclosure requirements of the 
final rules, will address the concern raised by one commenter regarding 
inconsistent pricing among hospitals. The disclosure required for 
hospitals under the Hospital Price Transparency final rule will help 
provide local and more specific pricing information through the 
availability of information on five types of standard charges, but the 
information will only be made publicly available for the items and 
services that hospitals provide. The final rules supplement this 
information by providing information related to negotiated rates or 
derived amounts and allowed amounts for all covered items and services. 
Thus, the final rules will provide a window into pricing for all items 
and services, while the Hospital Price Transparency final rule requires 
disclosure of more specific pricing information for the items and 
services provided by hospitals. Finally, the final rules also 
supplement the Hospital Price Transparency final rule because the final 
rules make the information for all contracted network hospitals 
available from one plan or issuer in a single, centralized file. 
Therefore, the final rules permit consumers--especially when using 
third-party web-based tools--to more readily compare hospital rates 
within and across plans and issuers.
    Several commenters expressed concerns about participant, 
beneficiary,

[[Page 72219]]

and enrollee privacy related to the proposed disclosures of negotiated 
rates and allowed amounts. Some commenters expressed concerns about how 
third-party developers or other downstream entities would use and 
protect participant, beneficiary, and enrollee data. They noted that 
even though the Departments' disclosure requirements do not include 
PHI, patients could be enticed to share personal data with third-party 
developers and other secondary entities who could potentially use the 
information to re-identify consumers. Some commenters stated that 
parties not subject to HIPAA could seek to commercialize consumers' 
information. One commenter suggested the Departments look to HCCI as an 
example of how de-identified data can advance the goals of 
transparency, which could mitigate concerns about proprietary 
information while maintaining meaningful, granular information that 
illuminates price variation in the health care system.
    One commenter stated that the Departments should consider the 
proposed rules in the context of other HHS rules related to the 
interoperability of data and delay the implementation of all such rules 
until HHS develops consumer privacy and protection requirements for 
third-party applications developed by non-HIPAA-covered entities. 
Another commenter recommended that, if the rules are finalized without 
additional privacy protections, the Departments should conduct an 
educational campaign to inform consumers of the consequences of 
providing information to third-party application developers. A 
commenter also expressed national security concerns regarding the 
machine-readable files, noting that the health status of Americans is a 
valuable commodity for foreign intelligence services.
    The Departments acknowledge commenters' concerns about third-party 
application developers and other entities gaining access to personally 
identifiable information (PII) and PHI through consumer use of online 
applications. The Departments further acknowledge comments that 
consumers may not always fully understand how their information, 
including sensitive medical information, will be used or stored by such 
third parties. However, the Departments also acknowledge that consumers 
have a right to access, use, and share their own health information, 
both generally and under HIPAA. The Departments are also of the view 
that there is ample evidence that consumers require help to understand 
their health coverage, their out-of-pocket costs for health care items 
and services, and how their health care choices affect the overall 
costs of their health coverage and health care items and services.\161\ 
The final rules will allow access to data, supplementary resources, and 
other assistance consumers need to make informed choices by fostering 
innovation and offering access to tools that consumers may use to make 
informed health care choices.
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    \161\ Arora, V., Moriates, C., and Shah, N. ``The Challenge of 
Understanding Health Care Costs and Charges.'' The American Medical 
Association Journal of Ethics. November 2015. Available at: https://journalofethics.ama-assn.org/article/challenge-understanding-health-care-costs-and-charges/2015-11.
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    The Departments likewise considered evidence of significant 
consumer reliance on the internet for all kinds of information, but 
especially for health information. In a study conducted by the Pew 
internet & American Life Project and published in July 2003, 
researchers found that 80 percent of internet users, or about 93 
million Americans, have searched for a health-related topic online, a 
62 percent increase since 2001.\162\ Popular search topics included 
health insurance (25 percent); a particular doctor or hospital (21 
percent); and alternative treatments (28 percent).\163\ By 2013, the 
number of Americans searching for health information online had nearly 
doubled from 2003, to about 182 million people.\164\ A 2018 study found 
a significant correlation between the use of online resources to obtain 
health information and the decisions consumers take concerning health 
care services.\165\
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    \162\ ``Health Searches and email Have Become More Commonplace, 
But There is Room for Improvement in Searches and overall internet 
access.'' internet Health Resources. Pew Research Center. July 16, 
2003. Available at: https://www.pewresearch.org/internet/2003/07/16/internet-health-resources/.
    \163\ Id.
    \164\ Fox, S., and Duggan, M. ``Health Online 2013.'' Pew 
Research Center. January 15, 2013. Available at: https://www.pewresearch.org/internet/2013/01/15/health-online-2013/.
    \165\ Chen, Y. et al. ``Health Information Obtained From the 
internet and Changes in Medical Decision Making: Questionnaire 
Development and Cross-Sectional Survey.'' Journal of Medical 
internet Research. Volume 20. No. 2. February 2017. Available at: 
https://www.jmir.org/2018/2/e47/pdf.
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    The Departments are of the view that many American consumers have 
some experience with dealing with the disclosure of sensitive health 
information on the internet \166\ and that consumer reliance on the 
internet for health care information will only increase despite 
inherent privacy risks. The Departments considered that websites and 
internet applications that collect consumer information provide 
information through privacy policies and terms of service that are 
available to users of how their information may be used and shared. 
Federal laws and enforcement mechanisms are in place to help protect 
consumers from unfair and deceptive practices, including deceptive data 
collection and the sale of data collected without adequate consumer 
notice.\167\ Given existing measures to protect consumer privacy on the 
internet, the Departments are of the view that common internet privacy 
risks should not operate to deprive consumers of the information, 
tools, and support they need to make informed choices related to health 
care coverage, providers, items, and services.
---------------------------------------------------------------------------

    \166\ Zhu, P., Shen, J., and Xu, M. ``Patients' Willingness to 
Share Information in Online Patient Communities'' Questionnaire 
Study.'' Journal of Medical internet Research. Volume 22. No. 4. 
April 2020. Available at: https://pubmed.ncbi.nlm.nih.gov/32234698/.
    \167\ ``Privacy & Data Security Update: 2019.'' United States 
Federal Trade Commission. Available online at: https://www.ftc.gov/system/files/documents/reports/privacy-data-security-update-2019/2019-privacy-data-security-report-508.pdf; see also ``Privacy and 
Security Enforcement.'' United States Federal Trade Commission. 
Available at: https://www.ftc.gov/news-events/media-resources/protecting-consumer-privacy/privacy-security-enforcement (``the FTC 
can and does take law enforcement action to make sure that companies 
live up to [the] promises'' regarding how consumer information will 
be safeguarded); see also Complaint in United States v. Facebook, 
Case No. 19-cv-2184, U.S. District Court for the District of 
Columbia. Available at: https://www.ftc.gov/system/files/documents/cases/182_3109_facebook_complaint_filed_7-24-19.pdf (FTC complaint 
leading to a historic $5 billion fine for, among other things, 
deceptive practices in violation of section 5(a) of the FTC Act 
where the social media company failed to effectively disclose that 
consumer information would also be used for advertising). The 
referenced fine can be found at: https://www.ftc.gov/news-events/press-releases/2019/07/ftc-imposes-5-billion-penalty-sweeping-new-privacy-restrictions, last accessed Sep. 11, 2020 (press release 
announcing fine).
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    Even though the Departments are not persuaded that privacy risks 
common to the use of internet applications outweigh the benefits of the 
disclosures under these the final rules or the general need for price 
transparency, ensuring the privacy and security of consumer PII and PHI 
is a top priority for the Departments. The Departments will work with 
plans and issuers to provide information they can use to educate 
participants, beneficiaries, and enrollees about sharing their health 
information with third party applications. This will include 
information on about the roles of Federal agencies such as the Office 
for Civil Rights (OCR), the FTC, and ONC, which already focus on 
ensuring that consumer privacy rights and interests are appropriately 
protected. The Departments will encourage plans

[[Page 72220]]

and issuers to share this information with their participants, 
beneficiaries, and enrollees who might elect to share health 
information with third-party applications.
    In finalizing the rules, the Departments considered the large 
number of consumers who have decided to share personal information 
because they have determined that the benefits offered by an internet 
website or mobile application outweigh potential risks to their 
privacy. The Departments are of the view that consumers will be able to 
make similar determinations with regard to applications that make use 
of data to be disclosed through the machine-readable files required by 
the final rules.
    As discussed earlier in the preamble to the final rules, the 
Departments also are not persuaded by the argument that the disclosures 
required under the final rules, or disclosures consumers may make to 
applications that leverage the data required, could introduce national 
security concerns. First, the information the Departments are requiring 
to be disclosed through the machine-readable files does not include PHI 
or PII. Additionally, as discussed in more detail later in this 
preamble, in an effort to ensure that the disclosures balance price 
transparency with the need to protect privacy, the Departments have 
modified the proposed rules to increase the minimum disclosure 
threshold from 10 to 20 unique payment amounts, where any historical 
payment amounts connected to less than 20 claims for payment would be 
omitted from the machine-readable file containing out-of-network 
allowed amounts and historical billed charges (the Allowed Amount 
File). The increase will further limit the possibility that individual 
participants, beneficiaries, and enrollees may be identified through 
historical allowed amount data. Second, the information a consumer 
could share with applications incorporating data required to be 
disclosed through the final rules is not significantly different from 
data consumers already actively share through similar applications. 
Therefore, the Departments are not convinced there are unique national 
security concerns flowing from the disclosures required by the final 
rules.
    One commenter was concerned about allowing third parties to use 
plan and issuer information to provide cost and pricing information to 
consumers without those third parties being obligated to provide 
accurate and relevant information to consumers. The accuracy of third-
party internet-based tools and applications will be important to 
achieving the goals of transparency in coverage. However, the cost and 
pricing information included in third-party internet-based tools, and 
tools developed by other secondary entities, would only be as accurate 
as the public disclosures made by plans and issuers. Therefore, the 
Departments are of the view that it is in the best interest of plans 
and issuers to ensure data accuracy through a robust quality assurance 
process if they have concerns about the accuracy of cost and pricing 
information being provided to consumers through third-party internet-
based tools. Furthermore, nothing in the final rules prohibits plans 
and issuers from including comprehensive data dictionaries and other 
supplementary documentation along with the machine-readable files. 
Plans and issuers are also free to provide plan-specific disclaimers or 
clarifications regarding the information they are required to produce. 
Finally, the Departments expect that consumers, plans, issuers, and 
other health care stakeholders will monitor third-party internet-based 
tools for accuracy and will and report concerns to the developer, the 
public, and appropriate state and Federal agencies, including the 
Departments, for evaluation and potential action.
    The Departments further expect that market forces will act to weed 
out applications that do not provide reliable information. Consumers 
who use a third-party application or other online tools for health care 
decision support and later conclude that the tool misled or misinformed 
them will, at minimum, cease use of the tool. Such consumers are also 
likely to rate the application poorly or leave unfavorable reviews, 
reducing the likelihood that other consumers who see the rating or 
review will rely on the tool. Over time, consumers and other 
stakeholders may collectively identify the most accurate and highest 
quality tools, while reducing use of less accurate, unreliable tools. 
The Departments also expect that third-party tools will inform users of 
limitations on the accuracy of their information and will present 
relevant disclaimers informing consumers that any estimates of out-of-
pocket liability are not guarantees regarding consumer liability for 
services. Tool users also will have the opportunity to evaluate and 
could attempt to confirm any cost estimates provided by online tools by 
contacting the plan, issuer, or health care provider they ultimately 
choose based on information provided by the tool. Such measures will 
address the risk that consumers will be led to unreasonably rely on any 
cost estimate provided by a third-party tool to their financial 
detriment.
    The Departments are of the view that it is in plans', issuers', and 
developers' best interests to provide accurate information. However, 
the Departments will monitor the accuracy of the information provided 
through third-party developers and secondary entities and will take 
information obtained through this monitoring into account for future 
regulatory action or guidance, as appropriate.
    One commenter recommended that any information made available to 
the public should provide an explanation of why the cost of care is 
variable among hospitals. The commenter further suggested the 
explanation reference unique challenges faced by essential hospitals 
that care for a larger proportion of vulnerable patients.
    Being mindful of the goal to provide sufficient technical 
flexibility in the formatting of the machine-readable files, the 
Departments decline to require plans and issuers to include specific 
supplementary information beyond reporting the data specified for the 
machine-readable file formats. As noted above, nothing in the final 
rules prevents a plan or issuer from providing supplementary materials, 
including footnotes, disclaimers, data dictionaries, and other 
explanatory language, as accompaniments with the machine-readable 
files. The Departments are of the view that any additional context 
around the machine-readable files that can be provided through 
supplementary materials are likely to be a benefit to consumers and 
others who seek to understand and use the data contained in the 
machine-readable files. The Departments recommend plans and issuers 
work closely with providers, consumers, developers, community leaders, 
and other stakeholders to ensure that all perspectives are taken into 
account when developing materials supplemental to the machine-readable 
files. While declining to require plans and issuers to include a 
specific explanation for why the cost of care could vary among 
hospitals, the Departments acknowledge that this information is an 
example of appropriate explanatory language that could accompany the 
machine-readable files.
    The final rules adopt, with modifications, the requirements that 
plans and issuers publicly disclose applicable in-network rates 
(including negotiated rates, derived amounts, and underlying fee 
schedule rates), out-of-network allowed amounts for covered items and 
services, including prescription drugs, through machine-

[[Page 72221]]

readable files. The final rules also adopt the requirement that plans 
and issuers publicly disclose in-network historical net prices for 
covered prescription drugs through a machine-readable file. In 
recognition of the unique pricing attributes of prescription drugs, the 
final rules require the reporting of information on prescription drugs 
that would have been included in the In-network Rate File (referred to 
as the Negotiated Rate File in the proposed rules) in a separate 
machine-readable file, as described later in this preamble. The 
Departments continue to be of the view that the release of this 
information is appropriate and necessary to empower consumers to make 
informed decisions about their health care, spur competition in health 
care markets, and to slow or potentially reverse the rising cost of 
health care items and services.
    The Departments stated the intention in the proposed rules to make 
available non-substantive technical implementation guidance through the 
collaborative GitHub platform (an online hosting platform for 
development and source code management that permits version control), 
which will facilitate further technical assistance in addressing how 
unique plan designs can comply with the requirements of the final 
rules, as needed. The Departments received comments that supported the 
Departments' development of specific technical standards for the files 
to which plans and issuers must adhere. One commenter recommended the 
Departments provide guidance to plan sponsors who are able to provide 
some, but not all, of the file data elements. Another commenter stated 
that the proposed rules do not make clear how to report items and 
services provided through capitated and bundled payment arrangements in 
the files; noting that this information is necessary for consumers to 
measure provider value. One commenter supported the Departments' 
statement that it would provide technical implementation guidance for 
the files but requested a robust public comment solicitation far in 
advance of the applicability date for the rules.
    The Departments are of the view that providing specific technical 
direction in separate technical implementation guidance, rather than in 
the final rules, will better enable the Departments to update the file 
technical requirements to keep pace with and respond to technological 
developments. The Departments note that the technical implementation 
guidance is intended to facilitate a collaborative effort between the 
Departments and plans and issuers in order for plans and issuers to 
meet the public disclosure requirements of the final rules, while 
providing flexibility to account for unique IT systems, and issuer and 
plan attributes. To the extent a plan's or issuer's unique attributes 
(such as use of an alternative contracting model) are not addressed 
sufficiently through the technical implementation guidance, the 
Departments intend to provide targeted technical assistance to help 
ensure all plans and issuers are able to meet the public disclosure 
requirements under the final rules. Therefore, the Departments are 
developing technical implementation guidance for plans and issuers, 
which will be available on GitHub, to assist them in developing the 
machine-readable files.
    In the proposed rules, the Departments indicated that minimum 
requirements for standardized data elements would be necessary to 
ensure users would have access to accurate and useful pricing 
information. Without such baseline requirements, the negotiated rate 
and allowed amount data for out-of-network services made available by 
each group health plan and health insurance issuer could vary 
dramatically. This would further create a disincentive to health care 
innovators developing tools and resources to enable consumers to 
accurately and meaningfully use, understand, and compare pricing 
information for covered items and services across providers, plans, and 
issuers. Accordingly, under the proposed rules, a plan or issuer would 
be required to publish two machine-readable files. The first file would 
include information regarding rates negotiated with in-network 
providers. The second file would include historical data showing 
allowed amounts for covered items and services furnished by out-of-
network providers. The preamble to the proposed rules referred to these 
files as the Negotiated Rate File and the Allowed Amount File, 
respectively. For the final rules, the file referred to as the 
Negotiated Rate File in the proposed rules has been renamed the In-
network Rate File to reflect modifications made in the final rules to 
ensure the file accommodates plans and issuers operating under payment 
models other than the fee-for-service (FFS) model. The final rules 
adopt the requirement to produce both the In-network Rate File and 
Allowed Amount File with the modifications discussed elsewhere in this 
preamble. As previously discussed, the final rules also adopt the 
requirement to produce an additional file, referred to in this preamble 
as the Prescription Drug File through which plans and issuers are 
required to publicly disclose negotiated rates and historical net 
prices connected to prescription drugs.
    As noted, the final rules modify the In-network Rate File 
requirements to clarify the expectations for reporting negotiated rates 
(or comparable derived amounts, which are explained in detail later in 
this section) for plans and issuers using alternative reimbursement 
models. The final rules also clarify that plans and issuers must 
include an underlying fee schedule rate when one is used to determine 
cost-sharing liability, where that amount differs from the negotiated 
rate (or comparable derived amount) used to determine provider 
reimbursement.
    The final rules modify the Allowed Amount File to clarify that it 
must also include information related to billed charges in addition to 
allowed amounts. The final rules also finalize additional requirements 
for the In-network Rate File, Allowed Amount File, and Prescription 
Drug File to require plans and issuers to include a Place of Service 
Code and a provider tax identification number (TIN) in addition to the 
provider NPI. These modifications are discussed in more detail later in 
this section of this preamble.
Specific Content Elements
    In the proposed rule, the Departments indicated that the Negotiated 
Rate File and the Allowed Amount File would be required to include 
content elements discussed in this section of this preamble. In the 
final rules, these content elements continue to apply to the In-network 
Rate File and the Allowed Amount File, as well as to the Prescription 
Drug File, except where otherwise indicated.
a. First Content Element: Name and Identifier for Each Coverage Option
    The first content element that plans and issuers will be required 
to include in the machine-readable files is the name and identifier for 
each coverage option offered by a group health plan or health insurance 
issuer. For the identifier, the Departments proposed that plans and 
issuers use their Employer Identification Number (EIN) or Health 
Insurance Oversight System (HIOS) IDs, as applicable. The Departments 
sought comment on whether EINs and HIOS IDs are the appropriate 
identifiers for this purpose. The Departments also sought comment on 
whether there are other plan or issuer identifiers that should be 
considered and adopted.
    The Departments did not receive any comments on this content 
element, and the final rules adopt this provision with

[[Page 72222]]

modifications to ensure clarity of the expectations for reporting. As 
reflected in the updated regulatory text, the Departments are 
clarifying whether an EIN or HIOS ID is applicable for this element. 
Plans and issuers must include their HIOS ID at the 14-digit product 
level unless the plan or issuer does not have a HIOS ID at the plan or 
product level, in which case the plan or issuer must use the HIOS ID at 
the 5-digit issuer level. If a plan or issuer does not have a HIOS ID, 
it must use its EIN.
b. Second Content Element: Billing Codes
    The second content element that plans and issuers will be required 
to include in the machine-readable files is any billing code consistent 
with the definition of billing code provided in the final rules, 
including:
     A CPT code,
     a Healthcare Common Procedure Coding System (HCPCS) code,
     a DRG,
     a National Drug Code (NDC) (The final rules define the NDC 
code as a unique 10-digit or 11-digit 3-segment number assigned by the 
Food and Drug Administration (FDA), which provides a universal product 
identifier for drugs in the United States),\168\ or
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    \168\ In the preamble to the HIPAA regulations, HHS stated that 
it was adopting a uniform 11-digit format to conform with customary 
practice used in computer systems (65 FR 50314, 50329). (Aug. 17, 
2000). The HIPAA 11-digit NDC format is standardized such that the 
labeler code is always 5 digits, the product code is always 4 
digits, and the package code always 2 digits. To convert a 10-digit 
NDC to an 11-digit HIPAA standard NDC, a leading zero is added to 
the appropriate segment to create the 11-digit configuration as 
defined above. See 83 FR 38666 (Aug. 7, 2018).
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     another common payer identifier used by a plan or issuer, 
such as a hospital revenue code, as applicable, and a plain language 
description for each billing code.
    The Departments proposed to require that plans and issuers 
associate each negotiated rate or out-of-network allowed amount with a 
CPT, HCPCS code, DRG, NDC, or other common payer identifier, as 
applicable, because plans, issuers, and providers uniformly understand 
these codes and commonly use them for billing and paying claims 
(including for both individual items and services and items and 
services provided under a bundled payment arrangement). The Departments 
also proposed that plans and issuers must include plain language 
descriptions for each billing code. In the case of items and services 
that are associated with common billing codes (such as the HCPCS 
codes), the Departments specified that the plan or issuer could use the 
codes' associated short text description.
    In order to ensure that the machine-readable files provide 
meaningful information to consumers, as well as other stakeholders, the 
final rules adopt this content element as proposed, with the following 
modifications. For clarity, the regulation text is amended to remove 
language that merely restated the definition for the term ``billing 
code'' for each machine-readable file.\169\ This modification has been 
made purely to streamline the regulatory language, and it does not 
substantively alter the requirement to include a billing code, except 
as otherwise noted in this preamble. Additionally, along with 
separating prescription drugs into a separate machine-readable file, 
the final rules include a modification that clarifies that, in the case 
of prescription drugs, plans and issuers may only use the NDC as the 
billing code type because, as discussed later in this preamble, the 
accuracy of pricing information for prescription drugs requires precise 
and specific product information, including package size and 
manufacturer, which can only be achieved through the use of the NDC 
billing code. However, the Departments recognize that prescription drug 
products may be included in the In-network Rate File to the extent a 
plan or issuer uses an alternative payment arrangement, such as a 
bundled payment arrangement that includes prescription drugs. Therefore 
the final rules clarify that the In-network Rate file must include the 
required information under paragraph (b)(1)(i) of the final rules for 
all covered items and services, except for prescription drugs that are 
subject to a fee-for-service reimbursement arrangement, which would be 
reported in the prescription drug machine-readable file pursuant to 
paragraph (b)(1)(iii) of the final rules.
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    \169\ Specifically, the Departments have removed the following 
language from billing code requirements for the machine-readable 
files: ``. . . or other code used by the group health plan or health 
insurance issuer to identify covered items or services for purposes 
of claims adjudication and payment.''
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    The final rules require plans and issuers to include in the 
machine-readable files a billing code or other code used to identify 
covered items or services for purposes of claims adjudication, payment, 
and cost-sharing liability when making public the disclosure required 
under 26 CFR 54.9815-2715A3, 29 CFR 2590.715-2715A3, and 45 CFR 
147.212. The final rules adopt the requirement that plans and issuers 
associate each amount required to be reported with a CPT, HCPCS, DRG, 
NDC, or other common payer code identifier, as applicable, because 
plans, issuers, and providers uniformly understand these codes and 
commonly use them for billing and paying claims (including for both 
individual items and services and for bundled payment arrangement). As 
provided by the definition of billing code in the final rules, the 
Departments intend to provide flexibility to plans and issuers to make 
the data available through the codes that they use for billing 
services. While the final rules do not require plans and issuers to use 
a specific billing code (for example, CPT codes) for making public the 
disclosures required through the final rules, definition of billing 
code states that it is the code used by the plan or issuer ``for 
purposes of billing, adjudicating, and paying claims for a covered item 
or service.'' Therefore, where a plan or issuer uses a CPT code to 
identify a covered item or service for purposes of billing, 
adjudicating, and paying claims for that covered item or service, then 
they would need to use the CPT code in order to make public the 
disclosure required through the final rules for that item or service.
    One commenter recommended that the negotiated rates should be 
clearly stated in plain language that should be easy to understand 
rather than provided by billing codes through the machine-readable 
files. As an alternative, the Departments received some comments 
stating that the Departments should require hospitals and health 
insurance issuers to disclose all negotiated reimbursements by 
International Classification of Disease (ICD) code.
    The preamble to the proposed rules identified several common 
billing codes, noting that the list provided was not exhaustive. 
Further, the Departments did not explicitly prohibit including ICD-10 
codes on the file. The Departments note that nothing in the final rules 
would constrain plans or issuers from including ICD codes in the 
machine-readable files when these codes are used by the plan or issuer 
in a manner that meets the definition of a billing code in the final 
rules. In other words, where the plan or issuer uses an ICD code to 
identify health care items or services for the purpose of billing, 
adjudicating, and paying claims for a covered item or service, the plan 
or issuer may use the ICD code in the machine-readable files. As 
discussed earlier in this preamble, the Departments intend to issue 
technical implementation guidance; this guidance will include sample 
file schemas for the machine-readable files. To facilitate 
identification of the billing code type,

[[Page 72223]]

there will be an indicator in the file schemas that will allow plans 
and issuers to specify the particular type of billing code entered for 
each data entry in the machine-readable files.
    The Departments are aware that some covered items and services may 
not have a corresponding HCPCS, ICD, DRG, NDC or CPT code. The 
Departments clarify that plans and issuers are still required to 
include these covered items and services in their machine-readable 
files regardless of whether all corresponding data elements are 
available. When a covered item or service does not have a corresponding 
HCPCS, ICD, DRG, or CPT code associated with an item or service, a plan 
or issuer is permitted to choose its own indicator or other method to 
communicate to the public that there is no corresponding code. In the 
alternative, a plan or issuer is permitted to use the code to be 
defined by the Departments in technical implementation guidance issued 
along with the final rules that indicates that an item or service is 
not defined.
    At this time, the Departments have concluded that the common data 
requirements adopted by the final rules, which include a requirement to 
include a plain language description for each billing code, provides 
consumers with sufficient information to meaningfully inform health 
care purchasing decisions.
    Regarding information about prescription drug pricing, a commenter 
also suggested that, in lieu of NDC or HCPCS codes, a useful unit for 
reporting for drugs would be the RxNorm concept unique identifier 
(RxCUI).\170\ The commenter suggested use of RxCUIs because it would 
minimize burden by reducing the list of entries (3,000 to 4,000 RxCUIs 
down from 100,000 active NDCs) and because existing prescription drug 
machine-readable file requirement for Medicare Part D (Part D) and QHPs 
use RxCUIs.
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    \170\ The Departments note that the comments used the term ``Rx 
Common Unit Identifier'' to identify the full phrase for the RxCUI. 
The Departments assume that this is a misnomer and that the 
commenter was referring to RxNorm concept unique identifier, which 
is the generally accepted term for the acronym RxCUI.
---------------------------------------------------------------------------

    The Departments appreciate the commenter's alternative suggestion 
for including prescription drug information in the machine-readable 
files. The Departments considered requiring prescription drug pricing 
information through an alternative identifier. The Departments 
understand that an RxCUI could minimize the burden on plans and issuers 
by reducing the number of codes required to be included in the 
Prescription Drug File. RxCUI is a drug naming system that is produced 
by the National Library of Medicine (NLM), and RxCUIs are unique 
identifiers, which can represent multiple NDCs for similar drug 
products with the same brand name, active ingredient, strength and dose 
form (for example, multiple package sizes and/or manufacturers can be 
represented by a single RxCUI). The NDC, in contrast, is a unique 10-
digit or 11-digit 3-segment number, which provides a universal product 
identifier for drugs in the United States. The three segments of the 
NDC identify: The labeler (any firm that manufactures the drug); the 
product (specific strength, dosage form, and formulation of a drug); 
and the commercial package size and types. As noted above, multiple 
NDCs can be encompassed by one RxCUI, which is why there are many fewer 
RxCUI codes than NDCs. However, the accuracy of pricing information 
requires precise and specific product information, including package 
size and manufacturer. The Departments are concerned that permitting 
drug pricing information disclosures to be made through RxCUIs would 
potentially lead to inaccurate or misleading information being provided 
to the consumer. If drug pricing information is provided in the 
machine-readable files in the form of RxCUIs, then plans and issuers 
may not be able to provide the manufacturer negotiated rate, especially 
for those RxCUIs that include NDCs from several manufacturers.
    Some commenters noted that, because RxCUI is used by the Part D 
program and in the QHP program, the Departments should also require 
RxCUI in the machine-readable file for consistency across programs. 
While the Departments acknowledge that RxCUI is used in some contexts 
in both the Part D and QHP programs, namely formulary development, 
these programs do not exclusively use RxCUI. Indeed, both the Part D 
and QHP programs use NDC in addition to RxCUI, and NDCs are more 
generally used when information is required to be submitted to CMS for 
payment programs. For example, the Part D program receives the NDC on 
claims submitted by Part D plan sponsors through Prescription Drug 
Events (PDEs) and issuers in the individual and small group market 
include NDCs on claims data submitted to issuers' EDGE servers for HHS 
risk adjustment purposes. In short, other programs cited by commenters 
actually use NDCs for prescription drugs data submissions, particularly 
for payment that is similar to the pricing data required by the final 
rules. The Departments therefore conclude that requiring use of NDCs 
for the prescriptions drug pricing information included in the machine-
readable files is consistent with the practices CMS follows in other 
programs. Therefore, as stated earlier, the Departments are requiring 
that the only allowable billing code for prescription drugs in the 
machine-readable files is the NDC. The Departments determined that the 
NDC should be the required billing code for the reasons stated above 
and because the NDC is a standard billing code required for 
prescription drug transactions.
c. Third Content Element: In-Network Applicable Amounts (Negotiated 
Rates, Amounts in Underlying Fee Schedules, and Derived Amounts); Out-
of-Network Allowed Amounts; or Negotiated Rates and Historical Net 
Prices for Prescription Drugs
    The third-content element in the machine-readable files depends on 
the type of file: in-network amounts for the In-network Rate File, 
allowed amounts and historical billed charges for the Allowed Amount 
File, or negotiated rates and historical net prices for the 
Prescription Drug File.
All Machine-Readable Files
    The proposed rules specified that the specific pricing information 
within each file would have to be associated with a provider 
identifier, specifically the provider's NPI. Some commenters suggested 
additional data elements to support accurately identifying the provider 
through the machine-readable files. One commenter recommended that the 
Departments include the Place of Service Code in the machine-readable 
files. The commenter explained that this data element would clarify 
prices when provider entities associated with the same NPI have 
multiple sites of service. Place of Service Codes are CMS-maintained 
two-digit codes that are placed on professional claims, including 
Medicare, Medicaid, and private insurance, to indicate the setting in 
which a service was provided.\171\ The Place of Service code set is 
required for use in the implementation guide adopted as the national 
standard for electronic transmission of professional health care claims 
under HIPAA.\172\
---------------------------------------------------------------------------

    \171\ ``Place of Service Code Set.'' Centers for Medicare & 
Medicaid Services. Available at: https://www.cms.gov/Medicare/Coding/place-of-service-codes/Place_of_Service_Code_Set.
    \172\ ``Place of Service Codes.'' Centers for Medicare & 
Medicaid Services. Available at: https://www.cms.gov/Medicare/Coding/place-of-service-codes.

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[[Page 72224]]

    The Departments have considered this comment and agree that, in 
addition to NPI, including a Place of Service Code is important where a 
provider could be using the same NPI for multiple places of service. 
For instance, the same procedure from the same provider NPI received at 
an ambulatory surgery center (Place of Service Code 24) could have a 
significantly different price if received at an on-campus outpatient 
hospital (Place of Service Code 22). The Departments are of the view 
that being able to identify the place of service would be beneficial to 
consumers seeking to rely on the machine-readable files or third-party 
applications developed using the information publicly disclosed through 
the machine-readable files, in order to make health care purchasing 
decisions. The Departments are also of the view that this data element 
will help provide valuable insights regarding market dynamics for 
researchers, employers, regulators, and other files users. Because the 
Place of Service Code is information that must be included on a 
professional medical claim, the Departments do not foresee any issue 
with plans and issuers including this data element in the machine-
readable files in addition to the NPI. For these reasons, the 
Departments are finalizing a requirement to include the Place of 
Service Code in all three machine-readable files.
    In addition to the NPI and the Place of Service Code, the 
Departments have also become aware, through independent research, that 
a provider's TIN can be relevant to communication of accurate 
negotiated rates and allowed amounts information. It is the 
Departments' understanding that negotiated rates for items and services 
are based on the unique combination of a provider (NPI), service or 
item location (Place of Service code), and the TIN under which the 
provider is furnishing the item or service. If the TIN is not required 
in the file, the Departments are concerned that plans and issuers could 
report multiple negotiated rates for the same NPI for the same item or 
service without context to identify the underlying source of the 
difference. For example, if a provider NPI has a relationship with two 
different entities that have negotiated rates and bills under both of 
these entities, the same item or service for that provider NPI could 
appear in the report with two different negotiated rates. Without the 
TIN, consumers of the file would not be able to discern the reason for 
the difference in the two distinct negotiated rates. With the TIN, 
consumers of the file could see that the provider is billing for the 
same services under two separate entities. Therefore, if this unique 
combination of NPI, Place of Service Code, and TIN is not required, the 
pricing information represented in the machine-readable files might not 
present a complete and accurate picture of the market or provide 
consumers with reliable data upon which to base health care purchasing 
decisions. The Departments are of the view that this information is 
crucial to ensure that consumers are ultimately receiving location-
specific pricing information upon which they can rely to help make 
informed health care purchasing decisions. In order for the machine-
readable files to provide meaningful and actionable information, the 
final rules adopt a modification to all three machine-readable files, 
to require plans and issuers to provide the provider TIN in the file in 
addition to provider NPI and the Place of Service Code.
    The Departments have updated the technical implementation guidance 
and schemas for all three machine-readable files, so that location-
specific pricing information can be provided in the machine-readable 
files. This guidance will also provide more details on how the Place of 
Service Code, TIN, and NPI should be reported in order to represent the 
information for which public disclosure is required through the 
machine-readable files. The Departments are aware that this 
modification to the machine-readable files will increase the complexity 
and size of the machine-readable files and have considered this 
additional burden in the Information Collection Requests (ICR) section 
of the of the final rules. The benefits of including the Place of 
Service Code and TIN outweigh the costs, as the Departments are of the 
view that location-specific pricing information is critical to the 
meaningfulness of these files for the public.
    Another commenter noted that using NPIs to identify providers would 
make it difficult for consumers to use the machine-readable files 
because consumers do not usually have NPI information. The commenter 
stated that it would also be useful for consumers using the In-network 
Rate Files (including the uninsured and those shopping for alternative 
coverage) to have access to public information that lists the providers 
who participate in local plan and issuer networks.
    The Departments agree that including provider names in the machine-
readable files in addition to NPIs would help consumers and other 
stakeholders review and use the machine-readable files. However, the 
Departments have some concerns about requiring inclusion of provider 
names in the files. From a technical perspective, the Departments are 
concerned that inclusion of provider names, which do not have a 
consistent character length and can be quite long, will increase the 
size of the machine-readable files and, therefore, increase the burden 
of the files for plans and issuers. Additionally, provider names may 
include non-alphanumeric or other non-standard character encoding types 
that could interfere with the coding of the machine-readable files and 
cause defects. The Departments are concerned that the additional 
quality assurance procedures that plans and issuers would need to 
implement in order to address these issues could add even more burden 
with limited benefit.
    In addition, because the Departments expect the greatest benefits 
of these machine-readable files will be through the innovative tools 
developed by third parties, the Departments are of the view that the 
lack of availability of provider names in the machine-readable files is 
not a significant concern. The Departments anticipate that third-party 
internet-based developers and other secondary entities will be able to 
link the NPIs in the machine-readable files to publicly available 
provider information. The Departments note that there are several 
internet-based NPI lookup tools available online, including CMS's 
National Plan & Provider Enumeration System (NPPES) NPI registry.\173\ 
Nothing in the final rules prevents a plan or issuer from linking to an 
NPI lookup tool or providing more information for consumers and other 
stakeholders on its website through supplementary materials supporting 
the machine-readable files.
---------------------------------------------------------------------------

    \173\ CMS's NPPES registry is available online at the following 
website address: https://npiregistry.cms.hhs.gov/.
---------------------------------------------------------------------------

    For these reasons, the final rules do not require plans and issuers 
to include provider names in addition to NPI, TINs, and Place of 
Service Codes in the three machine-readable files.
In-Network Rate File
    The Departments finalize with modifications the proposed 
requirement that group health plans and health insurance issuers 
publish as the third content element negotiated rates in a machine-
readable file for all covered items and services--except that the 
Negotiated Rate File in the proposed rules has been re-named the In-
network Rate File. With the exception of information relevant to 
prescription drug products that are included as part

[[Page 72225]]

of an alternative payment arrangement (such as a bundled payment 
arrangement), the In-network Rate File will exclude information 
relevant to prescription drugs, as that information will be provided in 
the third machine-readable file. Based on comments and technical 
expertise within the agencies, the Departments have made modifications 
to clarify the expectations for reporting negotiated rates (or 
comparable derived amounts as explained elsewhere in this section) for 
plans and issuers using alternative reimbursement models for health 
care items and services. These modifications also clarify that plans 
and issuers must include an underlying fee schedule rate when one is 
used to determine cost-sharing liability, where that amount differs 
from the negotiated rate (or comparable derived amount) used to 
determine provider reimbursement. The Departments also finalize this 
change to reflect other modifications to the proposed rules meant to 
ensure the required In-network Rate File accommodates plans and issuers 
operating under payment models other than a standard fee-for-service 
(FFS) model.
    In the proposed rules, the third content element was negotiated 
rates under a plan or coverage regarding each covered item or service, 
including prescription drugs furnished by in-network providers. To the 
extent a plan or issuer reimburses providers for an item or service 
based on a formula or reference based-pricing (such as a percentage of 
a Medicare reimbursement rate), the proposed rules would have required 
the plan or issuer to provide the calculated dollar amount of the 
negotiated rate for each provider.
    In the proposed rules, the Departments expressed the understanding 
that some plans and issuers do not vary negotiated rates across in-
network providers. For instance, some plans and issuers have a 
negotiated rate that applies to every provider in a certain network 
tier. In such a case, the Departments proposed to require the plan or 
issuer to provide the negotiated rate for a covered item or service 
separately for every provider that participates in that tier of the 
network. If the plan or issuer reimburses for certain items and 
services (for example, maternity care and childbirth) through a bundled 
payment arrangement, the Departments proposed to require the plan or 
issuer to identify the bundle of items and services by the relevant 
billing code.
    The Departments also proposed to require plans and issuers to 
include the last date of the contract term for each provider-specific 
negotiated rate that applies to each item or service (including rates 
for both individual and bundled items and services).
    Several commenters suggested modifications to the requirement for 
public disclosure of negotiated rates, which they claimed would help 
mitigate the risk of unintended consequences, such as anticompetitive 
practices and increased health care prices. Commenters suggested that 
the final rules require plans and issuers to disclose the median rate 
or lowest negotiated rate instead of negotiated rates. Other commenters 
also expressed the opinion that information presented as summary or 
aggregated data would be more helpful for consumers. One of these 
comments noted that this could be achieved through plans identifying a 
range of in-network rates for common services.
    The Departments considered modifying the requirement to require 
plans and issuers to report the median negotiated rate, the lowest 
negotiated rate, or some other aggregated negotiated rate. The 
Departments noted in the proposed rules that consumers, researchers, 
and regulators gaining access to pricing information, including 
information on the variation in prices, could place downward pressure 
on health care prices and reduce overall health care spending, which is 
one of the goals of the final rules. The Departments are concerned that 
using an aggregated or otherwise summarized rate would not sufficiently 
address issues of pricing variation and could undermine other goals of 
price transparency efforts. A median or summarized rate would not be as 
reliable for insured or uninsured consumers to use when making health 
care purchasing decisions as it is individual prices upon which these 
consumers must rely to make health care purchasing decisions. Under 
standard economic theory, it is individual prices, and consumers' 
responses to those prices, that drive market forces. If the public 
disclosures do not include specific individual prices for in-network 
items and services, consumers may not have actionable information upon 
which to rely to make specific decisions.\174\ A median or summarized 
rate would not address the issue of price variation or dispersion, as 
it would mask the variation in a given geographic area.\175\ 
Additionally, a median or summarized rate could mask the differences 
between plans and coverages in a manner incompatible with drawing 
comparisons between coverage options. Therefore, the Departments are of 
the view that release of alternative data points, such as aggregated 
negotiated rates, or other summarized forms of negotiated rates, would 
not sufficiently advance the price transparency efforts and could 
undermine the intended impacts of the In-network Rate File.
---------------------------------------------------------------------------

    \174\ Stigler, G. ``The Economics of Information.'' The Journal 
of Political Economy. Volume 69. Issue 3. June 1961. Available at 
https://home.uchicago.edu/~vlima/courses/econ200/spring01/
stigler.pdf.
    \175\ Id.
---------------------------------------------------------------------------

    Commenters suggested the Departments limit the requirement for 
public disclosure of negotiated rate information in a way that protects 
plans and issuers from reverse engineering specific rates. For example, 
a commenter suggested the Departments limit the disclosure to plans and 
employer plan sponsors, while another commenter suggested that the 
final rules require plans and issuers to provide limited information to 
the public, such as statistical ranges, or rates distributions and 
require the provision of more detailed information to other 
stakeholders.
    The Departments considered limiting these disclosures by 
stakeholder type such that the disclosure of the most detailed 
information to the widespread public would be more limited. The 
Departments' determined that these limitations would conflict with the 
statute, which requires public disclosure, and the goals of the final 
rules. The Departments' goal is to empower consumers through the 
disclosure of actionable pricing information through the In-network 
Rate Files, as translated into consumer-friendly tools by third-party 
application developers.
    Some commenters expressed the view that public disclosure of rates 
by plans and issuers with alternative reimbursement models should be 
required and suggested the Departments work with stakeholders to 
establish requirements that are consistent with innovative payment 
models. One commenter stated that the Departments should not exclude 
from the negotiated file requirements plans with reimbursement 
arrangements different from FFS arrangements, such as plans with 
reimbursements based on a capitated amount or a value-based agreement. 
Some commenters noted that the release of negotiated rates places 
emphasis on FFS provider contracting and may hinder innovation in 
alternative payment contracting models, such as value-based 
contracting.
    The Departments received some comments on how the Departments could 
require plans and issuers to report

[[Page 72226]]

capitated and bundled payment arrangements through the In-network Rate 
File. One commenter noted that plans with a capitated arrangement 
should be able to assign a price to items and services based on an 
internal methodology. The commenter observed that plans with capitated 
payment arrangements must assign prices for purposes of submission of 
claims in support of the HHS risk adjustment program under 45 CFR 
153.710(c). Some commenters, however, argued that implementing some 
aspects of the proposed rules would not be feasible, such as listing 
prices for quality-adjusted and risk-adjusted contracts, which can only 
be calculated after the fact.
    By contrast, other commenters did not support a requirement for 
plans and issuers with alternative reimbursement arrangements to make 
public the disclosures required through the In-network Rate File. 
Commenters stated that releasing negotiated rate information for 
bundled or capitation arrangements would be a significant operational 
burden and could lead to inaccuracies and misinformed consumers. For 
example, several commenters noted that the entire suite of services 
that a consumer might need to look up for an episode of care is not 
known to patients or providers prior to the receipt of care. Another 
commenter noted that the information could be misleading to consumers 
because prices may not include the services provided by all providers 
that are involved in a patient's hospital care such as surgeons and 
anesthesiologists.
    The Departments agree that plans and issuers that use alternative 
reimbursement arrangements should still be subject to requirements to 
disclose rates through the In-network Rate File. Nowhere in the 
proposed rules did the Departments indicate that only plans and issuers 
that reimburse on a standard FFS model would be required to make public 
the disclosure of negotiated rates. As evidenced by the discussion of 
reporting of bundled payment arrangements and plans and issuers using 
alternative reimbursement models such as formula-based or reference-
based pricing in the proposed rules, the Departments intended the 
disclosures required through the final rules to apply to all plans and 
issuers, regardless of reimbursement model. The Departments clarify 
that plans and issuers that reimburse providers on a basis that is 
different from a standard FFS model would still be required to make 
public the disclosures of in-network negotiated rates, out-of-network 
allowed amounts and prices for prescription drugs as required by the 
final rules.
    Later in this preamble, the Departments have summarized the general 
reporting expectations for several alternative reimbursement models, 
including bundled payment arrangements and capitation arrangements 
(including sole capitation arrangements and partial capitation 
arrangements), reference-based pricing without a defined network, 
reference-based pricing with a defined network, and value-based 
purchasing. This summary is not meant to be exhaustive, as the 
Departments are aware that other alternative reimbursement or 
contracting models exist. However, before clarifying how these payment 
arrangements would work under the final rules, the Departments note 
modifications to the requirements for the pricing information that must 
be publicly disclosed through the In-network Rate File.
    Some commenters stated that the proposed rules did not acknowledge 
that negotiated rates alone provide an inaccurate or incomplete picture 
of health care item and service pricing. In response, the Departments 
conducted additional research to understand how the final rules could 
require the appropriate level of detail in the In-network Rate File and 
provide a more complete and transparent picture of prices of health 
care items and services. In response to comments, and as a result of 
this additional research, the Departments are modifying the language 
describing the requirement for the pricing information that must be 
publicly disclosed through the file. Specifically, the Departments are 
clarifying that the In-network Rate File should include all applicable 
rates, even where not referred to as negotiated rates. As described in 
the final rules, this could include negotiated rates, an underlying fee 
schedule rate or, derived amounts, as applicable. These modifications 
are intended to clarify disclosure requirements for plans and issuers 
that use alternative reimbursement arrangements and to ensure that the 
rates upon which consumer cost-sharing liability is determined as well 
as negotiated rates are publicly disclosed through the In-network Rate 
File. The Departments are of the view that this approach is consistent 
with the goals of transparency as outlined in the proposed rules 
because it ensures that the In-network Rate File will be both 
meaningful for consumers and requires transparency in price disclosures 
that will promote increased competition in health care markets. Without 
this clarification, the In-network Rate File could have potentially 
excluded rates that are used to determine cost-sharing liability, which 
is essential information upon which consumers would need to rely to 
make health care purchasing decisions. Further, retaining as proposed 
the requirement to include the negotiated rates that plans and issuers 
use to determine provider reimbursement is crucial to price 
transparency efforts, which will help foster competition and lower 
prices. Public disclosure of negotiated rates and derived amounts will 
also support research and regulatory oversight. For example, this 
information will help researchers evaluate alternative payment models 
in relation to the traditional FFS payment model, which could help spur 
more innovation in health care markets. State regulators will also be 
able to gain further insight into the various payment models, which 
would support general oversight of plans and issuers using different 
payment models, and could support market reform efforts.
    One commenter noted that plans and issuers that use capitated 
reimbursement arrangements may assign prices to items and services as a 
normal course of business. Thus, they should be able to disclose those 
prices as part of the In-network Rate File. The Departments agree. The 
final rules require a plan or issuer that does not have a negotiated 
rate to disclose a ``derived amount,'' which is defined as the price 
that a plan or issuer assigns an item or service for the purpose of 
internal accounting, reconciliation with providers, or for the purpose 
of submitting data in accordance with the requirements of 45 CFR 
153.710(c).
    Title 45 CFR 153.710(c) sets forth a process through which 
capitated plans that do not generate individual enrollee claims in the 
normal course of business must submit data for the purpose of the HHS-
operated risk adjustment program.\176\ As stated in the preamble to the 
HHS Notice of Benefit and Payment Parameters for 2014 final rule, many 
capitated plans currently use some form of encounter data pricing 
methodology to derive claims' prices, often by imputing an amount based 
upon the Medicare fee-for-service equivalent price or the usual, 
customary, and reasonable equivalent that would have been paid for the 
service in the applicable state market risk pool.\177\ For

[[Page 72227]]

the purposes of 45 CFR 153.710(c), an issuer offering a capitated plan 
is required to use its principal internal methodology for pricing those 
encounters for purposes of submitting risk adjustment data, such as the 
methodology in use for other State or Federal programs (for example, a 
methodology used for the Medicare Advantage market).\178\ If an issuer, 
including an issuer of a capitated risk adjustment covered plan, has no 
such methodology, or has an incomplete methodology, it must supplement 
the methodology in a manner that yields derived claims that are 
reasonable in light of the specific market that the plan is serving. 
Given these requirements under 45 CFR 153.710(c), the Departments are 
of the view that most issuers offering capitated plans that do not 
process claims on an individual basis, and therefore do not have 
negotiated rates, will have a derived amount.
---------------------------------------------------------------------------

    \176\ HHS has operated the risk adjustment program for the 
individual and small group markets under section 1343 of PPACA on 
behalf of all states and the District of Columbia since the 2017 
benefit year.
    \177\ 78 FR 15410, 15499-15500 (Mar. 11, 2013).
    \178\ Id., see also 78 FR 15410, 15470-71 (Mar. 11, 2013).
---------------------------------------------------------------------------

    The Departments acknowledge that 45 CFR 153.710(c)does not apply to 
group health plans or all health insurance issuers subject to these 
rules and so they may not calculate derived amounts for this purpose. 
The final rules do not require plans or issuers to develop a new 
methodology for providing derived amounts if the plan or issuer does 
not have an existing methodology used in the normal course of business. 
Therefore, the final rules require plans and issuers that do not have a 
negotiated rate to provide a derived amount, to the extent these 
amounts are already calculated in the normal course of business. Where 
a plan or issuer does not have a derived amount calculated in the 
normal course of business, they are not required to provide a derived 
amount.
    The Departments also note that under the final rules, where a plan 
or issuer includes in the In-network Rate File a comparable derived 
amount in lieu of the negotiated rate (for example, under a capitation 
arrangement where a specific negotiated rate is not available for a 
particular item or service), they will be required to add a notation to 
the machine-readable files indicating that the rate is subject to an 
alternative payment arrangement. The Departments are also aware that 
some plan and issuer contracting models use a mixture of approaches and 
note that plans and issuers should follow the general guidelines (to be 
provided by the Departments in the technical implementation guidance) 
based on how a particular covered item or service is reimbursed where a 
mixture of approaches is used in the same plan or coverage.
    The final rules clarify that, where plans and issuers use 
negotiated rates or a comparable derived amount and an underlying fee 
schedule rate as defined in the final rules, they are required to 
report both the negotiated rate or comparable derived amount and the 
underlying fee schedule rate used for that item or service. Therefore, 
the Departments are also modifying the In-network Rate File to require 
public disclosure of an underlying fee schedule rate, when applicable. 
The Departments are aware that under some reimbursement models, one set 
of negotiated rates is used for provider reimbursement (or comparable 
derived amounts are used for internal accounting purposes) and another 
set of rates, referred to in the final rules as an underlying fee 
schedule rate, is used for determining consumer cost-sharing liability. 
The Departments view the modification to the In-network Rate File to 
require public disclosure of an underlying fee schedule rate important 
to ensuring the public disclosures required through the rules include 
transparency in the prices used by all plans and issuers in making 
determinations of consumer cost-sharing liability. The final rules 
define the underlying fee schedule rates as the rate for an item or 
service that a plan or issuer uses to determine a participant's, 
beneficiary's, or enrollee's cost-sharing liability from a particular 
provider or providers, when that rate is different from the negotiated 
rate. For instance, under certain capitation payments which reimburse a 
provider a PMPM rate, the PMPM rate would be the negotiated rate. 
However, the plan or issuer would also have assigned a price for an 
item or service from that provider for the purpose determining cost-
sharing liability; that amount is the underlying fee schedule rate. 
Therefore, in this example, in the In-network Rate File, the plan or 
issuer would be required to report the negotiated rate, which in this 
case is the PMPM rate, and the underlying fee schedule rate used to 
determine cost-sharing liability.
    In the final rules, plans and issuers are required to disclose only 
those rates that are applicable to their particular reimbursement 
arrangement model. If a plan or issuer only uses one rate for 
determining both provider reimbursement and consumer cost-sharing 
liability, then only that rate would be applicable to the plan or 
issuer, and therefore required to be disclosed through the In-network 
Rate File. Where a plan or issuer uses an alternative reimbursement 
arrangement and does not have a negotiated rate, as defined in the 
final rules, the plan or issuer would be required to publicly disclose 
through the In-network Rate File the derived amount, to the extent the 
plan or issuer generates such an amount in the normal course of 
business. If a plan or issuer has a negotiated rate or a derived amount 
but does not also use that applicable rate to make determinations of 
consumer cost-sharing liability, then the plan or issuer would be 
required to publicly disclose both the negotiated rate or derived 
amount and the underlying fee schedule rate used to determine consumer 
cost-sharing liability.
    The Departments note that, while a scenario where a plan or issuer 
uses both negotiated rates or a comparable derived amount and an 
underlying fee schedule rate in their operations is more likely to 
occur under an alternative reimbursement model, it is possible to have 
both a negotiated rate and an underlying fee schedule rate in an FFS 
reimbursement arrangement. Such a scenario is possible where a plan 
that uses a traditional negotiated rate to reimburse a provider for a 
particular covered item or service and bases participant, beneficiary, 
or enrollee cost-sharing liability upon a different rate for the same 
item or service.
    Under bundled payment arrangements, plans and issuers may reimburse 
a provider for multiple services and items under a single billing code. 
Under these arrangements, plans and issuers should provide a negotiated 
rate (or comparable derived amount) for that single billing code and 
list the items and services, including prescription drugs, that are 
included in that bundle. If a negotiated rate (or comparable derived 
amount) exists for each item and service, including prescription drugs, 
within the bundle, the plan or issuer should include the negotiated 
rate for the total bundle and also include in the In-network Rate File 
the respective negotiated rates (or comparable derived amount) for all 
covered items or services included in the bundle.
    It is the Departments' understanding that, if the bundled payment 
arrangement exists to the exclusion of any reimbursement arrangement 
for the underlying services and items, payers and providers often 
continue to track, for purposes of informing renegotiation of the 
bundle, reimbursement at the level of the individual item or service 
using a derived amount. For the In-network Rate File, plans and issuers 
with this type of model are required to disclose the negotiated rate 
for the total

[[Page 72228]]

bundle and the derived amounts for individual items or services in the 
bundled payment arrangement. If a derived amount for these purposes 
does not exist, then plans and issuers would not be required to report 
a derived amount. Where a plan or issuer uses a derived amount or 
reasonable estimate in lieu of the negotiated rate, they will be 
required to add a notation to the machine-readable files indicating 
that the rate is subject to an alternative payment arrangement.
    The Departments acknowledge that there are many different types of 
capitation models. As stated in the example earlier, for capitation 
arrangements that reimburse a provider a capitated amount, such as a 
PMPM, or a similar direct primary care arrangement, the plan or issuer 
would report the negotiated rate, which in this case is the PMPM 
amount, and the underlying fee schedule, as applicable. Under certain 
other capitation models, the provider's capitation amount may be 
weighted dependent upon certain characteristics of the participant, 
beneficiary, or enrollee, such as age, gender, or co-morbidities. Plans 
and issuers with this type of capitation arrangement should provide the 
base negotiated rate, which is the negotiated rate before adjustments 
have been made for certain participant, beneficiary, or enrollee 
characteristics. Plans and issuers using capitation arrangements should 
notate any entry that represents a capitated amount and list all items 
and services, including prescription drugs that are covered under a 
particular capitation amount in the In-network Rate File.
    In some cases, a sole capitation arrangement exists, such as staff 
model HMOs under which services are provided by in-network salaried 
providers and there are neither negotiated rates nor an underlying fee 
schedule rate. In this case, plans and issuers are required to include 
a derived amount in the In-network Rate File. If an applicable rate (a 
negotiated rate, derived amount, or underlying fee schedule rate) does 
not exist for an item or service, then plans and issuers are not be 
required to report pricing information for that particular item or 
service.
    The Departments are aware that some plans and issuers use a partial 
capitation model where the plan or issuer reimburses providers under a 
variable FFS amount in addition to a flat capitation amount. The 
Departments expect plans and issuers using a partial capitation model 
to make public the FFS negotiated rate as well as the capitation 
amount. Plan and issuers must also add a notation to the file 
indicating that a capitation arrangement (or a partially capitated 
arrangement) exists. For specific items and services where plans and 
issuers using this model do not have an FFS negotiated rate in addition 
to a capitation amount (that is, for items and services where they do 
follow a full capitation model), plans and issuers are required to 
follow the reporting requirements described for sole capitation 
arrangements.
    Reference-based pricing without a defined network is an arrangement 
where payers reimburse providers based on a percentage (usually 120 
percent to 200 percent) of the Medicare rate, but do not have 
contractual agreements with providers. The Departments expect there 
will be no In-network Rate File for this type of arrangement because 
the plan or issuer does not have in-network providers as defined in the 
final rules.
    By contrast, under a reference-based pricing model with a defined 
network, payers have contractual agreements to reimburse providers 
based on a percentage of a different rate that is known or determinable 
by the parties (usually 120 percent to 200 percent of the Medicare 
rate), which is subject to change based upon adjustments that can be 
specific to the participant, beneficiary, or enrollee, such as age, 
gender, and severity of illness. To represent this type of arrangement, 
and other provider reimbursement models that are based upon 
participant, beneficiary, or enrollee-specific adjustments, the final 
rules clarify that plans and issuers are required to include for each 
item or service in the In-network Rate File, the base negotiated rate 
that applies before adjusting for participant, beneficiary, or enrollee 
-specific characteristics. The negotiated rate in the referenced-based 
pricing model must be represented as a dollar value that is the result 
of the calculation of the referenced amount and the applicable 
reference-based percentage. For example, a plan calculates provider 
reimbursement using a reference-based pricing model that sets 
reimbursement to Provider X at 120 percent of the Medicare rate for 
covered Item A. The reference-based percentage used to determine the 
base negotiated rate would be 120 percent. In the general course of 
business, the plan determines the Medicare rate for Item A using 
participant, beneficiary, or enrollee-specific characteristics, but, 
because there is no specific participant, beneficiary, or enrollee for 
purposes of populating the In-network Rate File, the plan or issuer 
must report the base negotiated rate that would apply prior to 
application of any participant, beneficiary, or enrollee-specific 
characteristics. In this example, the Medicare rate for Item A is $150, 
before applying adjusters for participant, beneficiary, or enrollee-
specific characteristics. Therefore, the plan would report a negotiated 
rate for Item A when received from Provider X of $180 ($150 multiplied 
by 120 percent) and must include this rate in the In-network Rate File.
    Finally, under a reimbursement arrangement that adjusts payments or 
reconciles provider payments after providing care, such as in many 
value-based purchasing models, the plan or issuer must also provide the 
base negotiated rate for the specific provider in the In-network File. 
For instance, in a value-based purchasing model, payers may adjust 
negotiated rates for a particular provider if the provider meets 
certain contractual goals, which may be related to quality, volume, and 
efficiency of care. The Departments clarify that quality or value 
dependent weighting factors or adjusters are not required to be 
included in the negotiated rate made public under the final rules.
    As noted earlier in this preamble, nothing in the final rules 
prevents a plan or issuer from providing supplementary materials, 
including footnotes, disclaimers, data dictionaries, and other 
explanatory language, as accompaniments with the machine-readable 
files. For example, a plan or issuer may choose to provide clarifying 
information related to how the negotiated rate, if reported as a base 
negotiated rate, may change depending on quality or value-dependent 
weighting factors, or participant, beneficiary, or enrollee-specific 
factors such as the severity of illness, age, or gender. Because base 
rates unadjusted for participant, beneficiary, or enrollee-specific 
factors are required to be reported for reference-based pricing 
arrangements, the Departments note that it is a best practice to 
include a disclaimer noting that the rate could change subject to 
participant, beneficiary, or enrollee-specific characteristics.
    Some commenters noted that simply listing the negotiated rates 
without context regarding overall cost would not help consumers make 
informed decisions. The commenter further noted that consumer decision-
making could be harmed if relying on negotiated rate information 
without context regarding provider billing practices. Other commenters 
stated that non-negotiated billed charges would be useful as an 
additional category of pricing information for the public, especially 
for

[[Page 72229]]

the uninsured and those seeking out-of-network care. Another commenter 
agreed that information on provider-billed charges is important for 
transparency, but this commenter suggested that providers, not issuers, 
would be the appropriate source of this information.
    As discussed later in this preamble, the Departments are of the 
view that inclusion of billed charges in the In-network Rate File is 
unnecessary to achieve the goals of the final rules because in-network 
providers are not permitted to balance bill participants, 
beneficiaries, or enrollees as in-network providers have agreed to 
accept the negotiated rate as payment in full (less any participant, 
beneficiary, or enrollee cost-sharing liability) for the item or 
service. However, inclusion of billed charges in the Allowed Amount 
File will provide meaningful information when coupled with allowed 
amount information because it will allow consumers to estimate their 
potential balance billing liability when receiving items and services 
furnished by out-of-network providers if balance billing is allowed in 
their state. Therefore, inclusion of billed charges in the In-network 
Rate File would not provide additional value for consumers.
    Moreover, the Departments are of the view that inclusion of the 
billed charge could be more misleading in the In-network Rate File 
because the billed charge is very rarely what the consumer or the payer 
ends up paying for a particular claim and may not have a clear 
relationship with the negotiated rate or underlying fee schedule. While 
the Departments agree that inclusion of billed charges in the In-
network Rate File would provide another data point for developers in 
developing the tools, adding billed charges would also increase both 
the size and complexity of the In-network Rate File. Because it appears 
that inclusion of this data element could obscure other pricing 
information and would not increase transparency of actual prices paid 
by participants, beneficiaries, enrollees, or payers, the Departments 
decline to add a billed charge data element requirement to the In-
network Rate File at this time.
    As discussed earlier in this preamble, the final rules finalize a 
requirement for plans and issuers to associate the pricing information 
disclosed on each of the three machine-readable files with three data 
elements that identify the provider and the location where the service 
was provided: NPI, TIN, and Place of Service Code. For the In-network 
Rate File, the Departments proposed that the negotiated rate should be 
the rate that applies to each item or service that is associated with 
the last date of contract term for each provider NPI. The final rules 
modify this requirement to clarify that the applicable rates publicly 
disclosed in the In-network Rate File should be the rates that apply to 
each item or service that is associated with the last date of the 
contract term or the contract expiration date for each provider as 
identified by NPI, TIN, and Place of Service Code.
Allowed Amount File
    For the Allowed Amount File, the third content element is 
historical out-of-network allowed amounts for covered items and 
services. The proposed rules would require plans and issuers to include 
in the Allowed Amount File each unique out-of-network allowed amount in 
connection with covered items or services furnished by a particular 
out-of-network provider during the 90-day time period that begins 180 
days prior to the publication date of the Allowed Amount File. As with 
the In-network Rate File, where a plan or issuer reimburses providers 
for an item or service based on a formula or reference based-pricing 
(such as a percentage of a Medicare reimbursement rate), the plan or 
issuer would be required to provide the calculated dollar amount of the 
allowed amount for each provider. Allowed amounts would have to be 
associated with the provider's NPI, TIN, and Place of Service code.
    The Departments designed this reporting requirement to elicit 
payment data that reflects recent out-of-network allowed amounts in 
connection with claims for out-of-network covered services. The 
Departments assumed these amounts would provide payment data that is 
useful to consumers because it is reflective of the most recent 
reimbursements. Specifically, the Departments proposed to require 
reporting based on dates of service within 180 days of the Allowed 
Amount File publication date to ensure that data is composed of recent 
claims (rather than older claims from multiple time periods) and to 
avoid the reporting of payments from inconsistent periods of time. The 
Departments took the view that payment data from defined periods of 
time would enable users to make meaningful comparisons across plans and 
coverage options.
    When disclosing an out-of-network allowed amount under this 
requirement, the Departments proposed to require a plan or issuer to 
disclose the actual amount the plan or issuer paid to the out-of-
network provider, plus the participant's, beneficiary's, or enrollee's 
share of the cost. For instance, if the out-of-network allowed amount 
for a covered service was $100, and the plan or issuer paid 80 percent 
of the out-of-network allowed amount ($80) per the terms of the plan or 
coverage, so that the participant, beneficiary, or enrollee was 
responsible for paying twenty percent of the out-of-network allowed 
amount ($20), the plan or issuer would report an out-of-network allowed 
amount of $100. This unique payment amount would be associated with the 
particular covered item or service (identified by billing code) and the 
particular out-of-network provider who furnished the item or service 
(identified by NPI, TIN, and Place of Service Code).
    The Departments clarify that, in contrast to the In-network Rate 
File, no special considerations for reporting alternative payment 
arrangements are necessary for the Allowed Amount File because plans 
and issuers are required to disclose actual amounts paid in the Allowed 
Amount File and can therefore account for retrospective reconciliations 
and weighting factors that require special considerations. For the 
Allowed Amounts File, the Departments expect plans and issuers that 
reimburse in-network providers using alternative payment methodologies 
to adhere to the standard requirement of providing allowed amounts on 
historical claims paid to out-of-network providers for each covered 
item or service during the applicable reference period. Plans and 
issuers generally do not reimburse out-of-network providers, with whom 
they do not maintain a contractual relationship, under an alternative 
payment arrangement. However, to the extent a plan or issuer uses an 
alternative payment arrangement to reimburse out-of-network providers, 
the plan or issuer would still be required to report the allowed amount 
paid to the out-of-network provider. The Departments will address, 
through the technical implementation guidance, how a plan or issuer 
will be able to represent data in the Allowed Amount File, as 
necessary. The Departments anticipate that plans and issuers that 
reimburse providers using reference-based pricing without a network 
will have larger than average Allowed Amount Files, as all of the 
payments would be made to out-of-network providers and would therefore 
be subject to this requirement.
    Some commenters supported disclosure of the ``historical'' payments 
made by plans and issuers to out-of-network providers. One commenter 
acknowledged that bulk de-identified data that informs a consumer of 
historical out-of-network allowed

[[Page 72230]]

amounts may be relevant to consumer decision-making regarding a 
particular provider or procedure. One commenter pointed out that if the 
Departments failed to adopt this requirement in tandem with the In-
network Rate File requirement, providers could withdraw from networks 
to avoid transparency requirements.
    By contrast, other comments were less supportive of the Allowed 
Amount File proposal. Several commenters stated that publishing 
historical out-of-network allowed amounts would not meet the 
Departments' purported goal of helping consumers understand costs and 
would possibly lead to consumer confusion. Commenters expressed concern 
that the Allowed Amount File could result in consumers receiving 
misleading information, which would lead to negative financial 
consequences for consumers because the file would not provide all 
information about potential out-of-network costs, such as those that 
could be incurred through balance billing, if allowed in their state. 
One commenter stated that inclusion of billed charges would allow the 
development of open source charge schedules. One commenter pointed out 
that the information in the machine-readable files would not address 
scenarios where a participant, beneficiary, or enrollee receives out-
of-network care in an in-network facility. Still other commenters 
expressed concerns about the reliability of the data as historical 
allowed amounts with out-of-network providers may not provide an 
accurate portrait of future cost information because issuers do not 
have contracts with out-of-network providers. Similarly, another 
commenter stated that health plans should not be responsible for 
publishing rates for providers with whom they do not maintain a 
relationship.
    One commenter recommended the Departments withdraw the proposal, 
making the argument that small health plans are unlikely to have a 
sufficient number of claims billed for any one procedure from a 
particular provider to make the file meaningful. In lieu of requiring 
the Allowed Amount File, another commenter suggested the Departments 
instead place the onus on out-of-network providers or suppliers to 
provide consumers with information about the costs of their services.
    The Departments continue to be of the view that release of this 
information is appropriate and necessary to empower consumers to make 
informed decisions about their health care, spur competition in health 
care markets, and to slow or potentially reverse the rising cost of 
health care items and services. As noted earlier in this preamble and 
in the preamble to the proposed rules, limiting access to data to a 
subset of consumers would not promote the transparency goals of PPACA 
and the final rules, and would reduce the potential for the final rules 
to drive down health care costs by increasing competition. If the 
Departments were to eliminate the Allowed Amount File requirement or 
reduce its scope, it would significantly reduce the benefits of the 
final rules for uninsured consumers and insured consumers evaluating 
out-of-network treatment options.
    The information in the Allowed Amount File, especially as filtered 
through innovative platforms and tools, will help consumers make more 
informed decisions regarding changes to their health coverage (for 
example, the purchase of new coverage or switching to a new plan). 
Furthermore, this information may help insured consumers make more 
informed health care decisions when seeking out-of-network treatment; 
and may help uninsured consumers make health care decisions and 
potentially allow them to negotiate more effectively with providers. 
Finally, the creation of Allowed Amount Files may help researchers and 
regulators monitor plan benefit design and help spur innovation.
    While there is some potential for some consumers to be confused by 
the information in the Allowed Amount Files, the Departments do not 
agree that the files will provide misleading information to consumers. 
The Departments expect most consumers to access this information 
through tools created by third-party application developers and other 
stakeholders, which will be able to provide additional context for the 
average consumer.
    The Departments proposed to require plans and issuers to report 
out-of-network allowed amounts for services furnished at least 90 days 
in the past to help ensure the availability of reasonable volumes of 
out-of-network allowed amount data in the Allowed Amount File. The 
Departments expressed the view that a 90-day lag between the end of a 
reporting period and the publication of required out-of-network allowed 
amount data will allow plans and issuers sufficient time to adjudicate 
and pay claims from out-of-network providers for the relevant reporting 
period. Claims processing times may vary between plans and issuers, and 
external factors may increase processing timelines. For example, the 
Departments noted in the proposed rules that many out-of-network 
providers do not send claims directly to plans and issuers but instead 
require participant, beneficiary, or enrollee to file out-of-network 
claims. This could mean that an out-of-network claim may not reach a 
plan or issuer for 6 to 12 months after a service is rendered. Such 
delays could negatively affect the volume of out-of-network allowed 
amount data and the ultimate usefulness of this data. For this reason, 
the Departments sought comment regarding whether requiring plans and 
issuers to report out-of-network allowed amounts for items and services 
furnished at least 90 days in the past is sufficient to ensure the 
proposed disclosures will yield sufficient volumes of historical data 
to be useful to consumers who wish to shop for services based on price. 
The Departments requested comment on whether there should be more time 
between the end of the reporting period and publication of the data, 
such as 120 days, 180 days, or longer, which would increase the 
likelihood that out-of-network claims from the relevant reporting 
period have been adjudicated and paid by the time of publication.
    The Departments did not receive comments directly in response to 
this comment solicitation and are finalizing the Allowed Amount File 
historical lookback period as proposed. The final rules, therefore, 
adopt a requirement for the Allowed Amount Files to include data for 
the 90-day period beginning 180 days before the file publication date. 
For example, a file published on June 30, 2021, should include data for 
a 90-day period beginning on January 1, 2021. The Departments will 
monitor the implementation of this requirement for the Allowed Amount 
Files and may revisit the lookback period if the 90-day reporting 
period beginning 180 days before file publication fails to yield 
sufficient out-of-network data on allowed amounts.
    The Departments specifically sought comment on whether the required 
disclosures of historical out-of-network allowed amounts would provide 
useful information that can assist consumers in locating services at an 
affordable cost, or whether there could be additional information that 
would be both useful to anticipated users and practical for plans and 
issuers to disclose for this purpose. For instance, the Departments 
stated in the preamble to the proposed rules that the Departments 
considered requiring plans and issuers to disclose amounts out-of-
network providers have charged participants, beneficiaries, and 
enrollees for covered services in the Allowed Amount File. The 
Departments noted they understood that such charged amounts would be 
included in any

[[Page 72231]]

claim for out-of-network benefits and could be helpful to consumers 
shopping for services based on price. The Departments sought comment on 
this data element.
    As summarized earlier in this preamble regarding the In-network 
Rate File, some commenters who supported the inclusion of non-
negotiated billed charges in the In-network Rate File also supported 
inclusion of billed charges in the Allowed Amount File. These 
commenters noted that billed charge information would be especially 
useful for the uninsured or those seeking out-of-network care. Another 
commenter agreed that information on provider-billed charges is 
important for transparency, but this commenter stated that providers, 
not issuers, would be the appropriate source for this information.
    Regarding these comments, the Departments agree that that a billed 
charges data element is important to ensure that the public disclosures 
required through the out-of-network Allowed Amount File are as useful 
to consumers as possible, including in the scenario where an insured 
consumer receives items or services from an out-of-network provider. 
Although the Departments are aware that the amount an out-of-network 
provider will ultimately balance bill (if allowed in their state) a 
consumer for an item or service does not always equal the difference 
between the billed charge and the allowed amount, the Departments are 
of the view that this information would aid consumers in understanding 
their potential out-of-pocket liability. In the jurisdictions that do 
not prohibit or limit balance billing, information on billed charges 
could aide consumers in their health care decision-making as it is 
possible that consumers may choose to receive or forgo a particular 
item or service from a particular provider based on the additional out-
of-pocket liability they could be expected to pay through a balance 
billing charge from a provider.
    Consumers may be able to shop for a particular out-of-network 
provider based on total cost of an item or service. For example, in a 
state that allows providers to balance bill, a consumer has a 
coinsurance of 40 percent for Service X when Service X is furnished by 
an out-of-network provider. Out of network Provider A's billed charge 
for Service X is $200, and the consumer's plan allows an amount of $100 
to be paid to the provider. Therefore, the consumer is responsible for 
a coinsurance amount of $40 ($100 allowed amount multiplied by the 
consumer's 40 percent coinsurance) and the consumer may be balance 
billed an additional $100 ($200 billed charge minus the $100 allowed 
amount). In comparison, out-of-network Provider B's billed charge for 
Service X is $120 and the consumer's plan allows the same amount of 
$100 to be paid to the provider. If the consumer receives Service X 
from Provider B, they will be responsible for the same coinsurance 
amount of $40 ($100 allowed amount multiplied by the consumer's 40 
percent coinsurance). However, if the consumer receives Service X from 
Provider B, the consumer may only be balance billed $20 ($120 billed 
charge minus $100 allowed amount), which would be an $80 savings to the 
consumer compared with receiving the Service X from Provider A. Note 
that this example assumes that both Provider A and Provider B will 
balance bill consumers, which is not always true even in states that 
allow balance billing. Consumers should also contact providers to 
inquire whether they will balance bill before making health care 
purchasing decisions using this information. Therefore, with 
information on both allowed amounts and billed charges, the consumer 
may choose to receive Service X from Provider B because their total 
out-of-pocket costs will likely be lower.
    The Departments note that it is possible that plans and issuers 
will populate the Allowed Amount File with multiple billed charges for 
the same item or service furnished by the same out-of-network provider. 
If this is the case, the billed charge in the Allowed Amount File will 
present an expected range and give consumers access to a reasonably 
accurate estimate of how much they can expect to be balance billed by 
an out-of-network provider, but the billed charge cannot provide to the 
consumer the exact amount they can expect to be balance billed when 
receiving items and services furnished by the out-of-network provider.
    For these reasons, the Departments are of the view that inclusion 
of the billed charges in the Allowed Amounts File will help provide a 
more complete picture of the full amount a provider could receive for a 
particular item or service, either from plans and issuers or directly 
from a participant, beneficiary, or enrollee. Furthermore, the 
Departments are of the view that requiring this information is 
consistent with the goal of providing consumers an understanding of 
their potential out-of-pocket liability in advance, similar to an EOB 
provided in advance, as billed charges are included on a participant's, 
beneficiary's, or enrollee's EOB and are often the first data available 
for understanding a participants, beneficiary's, or enrollee's out-of-
pocket liability.
    The Departments are aware that plans and issuers have information 
regarding providers' billed charges, even if they do not necessarily 
have information regarding specific balance billing amounts. The 
Departments are therefore of the view that the inclusion of billed 
charges in the Allowed Amount File will not substantially increase the 
burdens of the final rules. Nonetheless, the Departments are aware that 
adding billed charges will also increase both the size and complexity 
of the Allowed Amounts File. The Departments do not intend to increase 
the burden of developing and maintaining these files unless the 
inclusion of the additional data element is essential for providing 
meaningful pricing information to consumers. Because it is the 
Departments' view that this data element will increase transparency of 
actual prices paid by participants, beneficiaries, enrollees, and 
payers, the Departments are finalizing the Allowed Amounts File with 
the modification to add billed charges as an additional data point 
required to be disclosed through the file.
    The final rules define billed charges as total charges for an item 
or service billed to a plan or issuer by a provider. Plans and issuers 
are required to publicly disclose billed charges associated with each 
unique allowed amount that would be required under the final rules. The 
final rules further clarify that plans and issuers must report each 
unique combination of allowed amounts and billed charges for each out-
of-network provider, and their associated Place of Service Code, 
provider NPI, and provider TIN. For example, an out-of-network provider 
(under a single NPI, TIN, and Place of Service Code) submits 25 claims 
(or any other number of claims to meet the 20 unique claim threshold 
requirement discussed in more detail later in this preamble) to a plan 
or issuer for the service Y. The 25 claims have three \179\ different 
billed charges ($100, $150 and $200) and two different allowed amounts 
($50 and $150) for item Y. The plan or issuer should have one entry 
that represents each unique combination of billed charges and allowed 
amounts submitted by the out-of-network provider. Therefore, in this 
example, the Departments would expect

[[Page 72232]]

the plan or issuer to represent in the Allowed Amounts File no fewer 
than three unique entries, and no more than six unique entries for item 
Y from this out-of-network provider. For example:
---------------------------------------------------------------------------

    \179\ The Departments note that it is possible for a provider to 
have different allowed amounts for the same item or service covered 
by the same out-of-network provider because the plan or issuer does 
not have a contractual relationship with that out-of-network 
provider, by definition. For similar reasons, it is also possible 
for the billed charged submitted by the same out-of-network provider 
to for the same item or service to be variable.
---------------------------------------------------------------------------

     Entry A has a billed charge of $100 and an associated 
allowed amount of $50;
     Entry B has a billed charge of $150 and an associated 
allowed amount of $50;
     Entry C has a billed charge of $200 and an associated 
allowed amount of $50;
     Entry D has a billed charge of $100 and an associated 
allowed amount of $150;
     Entry E has a billed charge of $150 and an associate 
allowed amount of $150;
     Entry F has a billed charge of $200 and an associated 
allowed amount of $150.
    The Departments do not expect to see 25 different entries, unless 
they represented 25 distinct combinations of billed charges and 
associated allowed amounts from the out-out network provider for Item 
Y.
    In the Allowed Amount File, the file structure is envisioned as a 
parent/child data relationship, where certain data elements are 
included under or belong to other data elements, as a child to a 
parent. In the Allowed Amount File, the billed charge data element 
would serve as a child to the parent allowed amount element. Therefore, 
under each unique allowed amount for a particular item or service from 
a particular provider, the amount of each provider-billed charge is 
listed as a unique dollar amount.
    One commenter requested the Departments clarify what is meant by 
``allowed amounts for covered items or services furnished by particular 
out-of-network providers,'' questioning whether through inclusion of 
the word ``particular'' the Departments intended to reference 
specialized out-of-network providers upon which plans and issuers might 
place coverage limitations. The Departments clarify that inclusion of 
the word ``particular'' as a modifier of ``out-of-network providers'' 
was not intended to be a reference to specialized out-of-network 
providers upon which plans and issuers might place coverage 
limitations. Rather, use of the word ``particular'' indicates that 
Allowed Amount Files must include the historical allowed amounts for 
covered items and services furnished to each out-of-network provider to 
whom such payments were made during the reference period. The 
Departments clarify that under the final rules, and as contemplated in 
the proposed rules, plans and issuers are expected to include 
historical allowed amounts for every covered item or service furnished 
by each out-of-network provider so long as the unique claims threshold 
for the out-of-network provider is met.
    The Departments further clarify that plans and issuers are only 
required to include in the Allowed Amount File those covered items and 
services furnished by an out-of-network provider for which the plan or 
issuer has adjudicated claims and determined it will pay an allowed 
amount. If the plan or issuer has not adjudicated claims and determined 
it will pay an allowed amount for items or services furnished by an 
out-of-network provider, the plan or issuer is not required to include 
those allowed amounts or billed charges in the Allowed Amount File.
    In response to the comment that the information in the files would 
not address the scenario where a participant, beneficiary, or enrollee 
receives out-of-network care in an in-network facility, the Departments 
clarify that the expectation is that this information would be captured 
in the Allowed Amounts File. If a participant, beneficiary, or enrollee 
receives out-of-network care, even if the facility is in the 
participant's, beneficiary's, or enrollee's network, the provider will 
generate a claim and send a billed charge to the payer that will 
establish an allowed amount for the claim; the Departments expect this 
allowed amount to appear in the Allowed Amounts File in this scenario. 
As noted elsewhere in this preamble, the Departments will provide 
technical implementation guidance (as well as individualized technical 
assistance, as needed) to ensure that plans and issuers are able to 
make public the disclosures required through the final rules.
    The Departments do not agree with the commenter who asserted that, 
because some small health plans will not have a sufficient number of 
any one procedure from a particular provider to make the file 
meaningful, the Allowed Amount File requirement should be withdrawn. 
The relevant commenter did not provide a number of claims that it 
believed would make the file meaningful. In contrast, the Departments 
are of the view that the files will be meaningful to the public 
regarding all covered items and services from a particular provider 
regardless of the specific numbers of claims at issue, even if a 
particular provider bills relatively few claims to a particular plan or 
issuer. As discussed elsewhere in this preamble, for privacy and 
security reasons, the Departments are requiring disclosure for all 
covered items and services from a particular provider that meets the 
unique claims threshold established by the final rules. If a small 
health plan does not have sufficient claims for a covered item or 
service to meet the unique claims threshold for a particular provider, 
then that health plan is not permitted to publicly disclose information 
for that particular item or service paid to the particular provider. 
The Departments are of the view that most health plans and issuers will 
meet the unique claims threshold for a large proportion of items, 
services, and providers to make the files sufficiently meaningful to 
justify this requirement.
    In the preamble to the proposed rules, the Departments noted that 
providing this information could raise health privacy concerns. The 
Departments are committed to protecting PHI and other sensitive 
information. To address these privacy concerns, as discussed in this 
preamble, the Departments proposed that plans and issuers would not be 
required to provide out-of-network allowed amount data in relation to a 
particular provider and a particular item or service when compliance 
would require a plan or issuer to report out-of-network allowed amounts 
to a particular provider in connection with fewer than 10 different 
claims for payment. The Departments also noted that disclosure of such 
information would not be required if compliance would violate 
applicable health information privacy laws. In addition to proposing 
this exemption, the Departments proposed to require plans and issuers 
to include only unique out-of-network allowed amounts to mask the total 
episodes of care for a particular provider and item or service. In the 
proposed rules, the Departments expressed the view that these 
mitigation strategies, in addition to flexibilities proposed to allow 
the aggregation of reported data (as described later in this preamble), 
were sufficient to protect patients from identification based on 
information in the Allowed Amount File. The Departments solicited 
comment on whether additional privacy protections would be required.
    The Departments specifically requested comment on whether a higher 
minimum claims threshold, such as a threshold of 20 claims, would 
better mitigate privacy concerns and minimize complexity in complying 
with Federal or state privacy laws without compromising the integrity 
of the compiled information. The Departments also sought comment on 
additional approaches that could decrease the potential for aggregated 
health information that would be disclosed under the proposed rules to 
be

[[Page 72233]]

identified, especially with respect to smaller group health plans.
    In response, some commenters expressed concerns about maintaining 
HIPAA protections on the Allowed Amount File due to the small number of 
claims associated with specific services for out-of-network providers. 
Several commenters stated the threshold of 10 unique claims to require 
public disclosure of unique historical allowed amounts would be too low 
to protect consumers' PHI. One commenter requested that the Departments 
clarify how they arrived at the 10 claims threshold. Some commenters 
recommended different minimum thresholds. Some commenters recommended a 
minimum threshold of 50 claims. On the other hand, other commenters did 
not support increasing the threshold, noting that the files do not 
contain identifiable data and so would not pose a risk. One commenter 
stated that the files should be released including the lowest number of 
claims necessary to achieve the goal of protecting participant, 
beneficiary, and enrollee privacy and recommended keeping the proposed 
threshold of 10 claims. Another commenter requested that the 
Departments not make the threshold any higher, and even consider 
lowering the cutoff to five claims, to maintain access to price 
transparency data for rural Americans.
    Based upon comments received the final rules adopt a 20 unique 
claim threshold. The Departments are of the view that the 20 unique 
claim threshold balances the concerns expressed by commenters who 
suggested the Departments increase the threshold to 50 claims with the 
concerns of commenters who expressed the opinion that the proposed 10 
claim threshold (or an even lower threshold) would be sufficient to 
ensure the files include a meaningful amount of data. The Departments 
are of the view that 20 unique claims are sufficient to balance the 
privacy concerns against the needs for transparency through the Allowed 
Amounts File. This 20 unique claim threshold is more stringent than 
CMS' cell size suppression policy, which requires cells containing 
values of 1 through 10 to be suppressed in CMS data sets.\180\ 
Increasing the unique claim threshold from 10 to 20 claims will not 
significantly reduce the amount of data that are required to be made 
public through the Allowed Amount File. However, if the Departments 
were to increase the unique claim threshold to 50 claims, as suggested 
by some commenters, the Departments are concerned that this could 
significantly reduce the amount of data that are required to be made 
public through the Allowed Amount File, which could undermine the goal 
of price transparency.
---------------------------------------------------------------------------

    \180\ The CMS Cell Size Suppression Policy is outlined on the 
CMS website at the following location: https://www.cms.gov/Research-Statistics-Data-and-Systems/Files-for-Order/Data-Disclosures-Data-Agreements/DUA_-_NewLDS.
---------------------------------------------------------------------------

    The Departments are of the view that increasing the unique claim 
threshold from 10 to 20 claims will better balance the policy goal of 
maximum transparency with the need to protect participants, 
beneficiaries, and enrollees from the possibility of being re-
identified through the data included in the Allowed Amount File. In 
addition to this strategy, the Departments expect that the flexibility 
discussed later in this preamble under the special rule to permit 
aggregation of reported data will help protect participants, 
beneficiaries, and enrollees from identification based on information 
in the Allowed Amount File. Finally, the Departments reiterate that the 
disclosure of the information is not required if disclosure would 
violate applicable health information privacy laws. The Departments 
note that this exception does not mean that these disclosures are not 
required where a law that would otherwise prohibit the disclosure 
permits disclosure if required by law.
Prescription Drug File
    The Departments finalize negotiated rates for prescription drugs as 
the third content element in the Prescription Drug File. The 
Departments received several comments related to whether negotiated 
rates for prescription drugs should be disclosed through the machine-
readable files, and if so, which price or prices related to 
prescription drugs should be required to be included. Many commenters 
provided general support for the public release of negotiated rates for 
prescription drugs. One commenter asserted that releasing negotiated 
rates for prescription drugs would result in lower costs for health 
plans and consumers, which could lead to a reduction in manufacturer 
discounts of upwards of three percent.
    Several commenters did not support disclosure of negotiated rates 
for prescription drug prices through the machine-readable files. 
Commenters recommended that the In-network Rate File should not include 
prescription drugs for several reasons. These reasons include: The 
complexity of prescription drug pricing (prices are determined by a 
formula that is determined at the point-of-sale and can change on a 
daily basis; the information would not be relevant to consumer 
decision-making; and the existence of established drug pricing tools 
that provide support for consumer decision-making. Some commenters 
stated that the unique nature of prescription drug pricing would make 
the release of negotiated rates difficult and further noted that the 
rates negotiated between PBMs and pharmacies are considered 
confidential. Another commenter stated that the Departments should only 
require disclosure of prescription drug prices when the information 
disclosed is directly related to the cost a plan participant, 
beneficiary, or enrollee would need to pay out of pocket so as not to 
undermine group health plans' and health insurance issuers' ability to 
negotiate lower drug costs. Some commenters claimed that plans and 
issuers have no control over prescription drug costs and may not be 
able to provide this information. Instead, commenters asserted that 
information related to prescription drug costs should come from PBMs or 
prescription drug manufacturers.
    In 2018, retail prescription drug spending represented 
approximately nine percent ($335 billion) of overall health 
spending.\181\ In 2017 large group health plans and issuers accounted 
for the largest share of prescription drug spending amongst other 
payers, despite generally having a younger and healthier population 
than public payers.\182\ The Departments maintain that plans and 
issuers have an essential role,\183\ and vested interest in controlling 
prescription drug spending. Moreover, as prescription spending 
continues to rise,\184\ so does the trend of prescription rebates.\185\ 
According to

[[Page 72234]]

surveyed health plan and PBM personnel, PBMs passed through 78 percent 
of manufacturer rebates to health plans in 2012 and 91 percent in 
2016.\186\ And while some plans and issuers may use these rebates to 
dampen premium increases,\187\ there remains an unclear prescription 
drug supply chain that masks the true costs of prescription drugs. The 
Departments are of the view that it would not advance the goals of the 
final rules to exclude a category of items and services that comprises 
such a significant proportion of health care spending.
---------------------------------------------------------------------------

    \181\ ``National Health Expenditures 2018 Highlights.'' Centers 
for Medicare & Medicaid Services. Available at: https://www.cms.gov/files/document/highlights.pdf.
    \182\ Cubanski, J., and Rae, M. ``How Does Prescription Drug 
Spending and Use Compare Across Large Employer Plans, Medicare Part 
D, and Medicaid?'' Kaiser Family Foundation. May 20, 2019. Available 
at: https://www.kff.org/medicare/issue-brief/how-does-prescription-drug-spending-and-use-compare-across-large-employer-plans-medicare-part-d-and-medicaid/.
    \183\ ``How are prescription drug prices determined?'' American 
Medical Association. April 9, 2019. Available at: https://www.ama-assn.org/delivering-care/public-health/how-are-prescription-drug-prices-determined.
    \184\ ``National Health Expenditure Projections 2019-28.'' 
Office of the Actuary. Centers for Medicare & Medicaid Services. 
March 24, 2020. Available at: https://www.cms.gov/files/document/national-health-expenditure-projections-2019-28.pdf.
    \185\ According to the Academy of Managed Care Pharmacy, a 
prescription drug rebate is a monetary amount returned to a payer 
from a prescription drug manufacturer based on pharmaceutical use by 
a covered person or purchases by a provider. ``AMCP Guide to 
Pharmaceutical Payment Methods, 2013 Update.'' Available at: https://www.amcp.org/sites/default/files/2019-03/Full-Pharmaceutical-Guide-%283.0%29.pdf; see also ``The Prescription Drug Landscape, 
Explore.'' PEW Charitable Trusts. March 8, 2019. Available at: 
https://www.pewtrusts.org/en/research-and-analysis/reports/2019/03/08/the-prescription-drug-landscape-explored.
    \186\ Id.
    \187\ Id.
---------------------------------------------------------------------------

    The Departments agree that prescription drug pricing is complex but 
are of the view that complexity is not a valid reason for inaction. 
There are many different players in the prescription drug supply chain 
that may have some control over costs, including plans and issuers, 
manufacturers, wholesalers, pharmacies, and PBMs.\188\ As commenters 
stated, it is often the case that PBMs negotiate the price of a 
prescription drug for a plan or issuer based on a contract the plan or 
issuer maintains with the PBM; however, it is ultimately the plan or 
issuer who is responsible for deciding how the costs of prescription 
drugs are passed along to a participant, beneficiary, or enrollee. The 
Departments, therefore, are of the view that plans and issuers are 
aware of the negotiated rate for a prescription drug for which their 
participants, beneficiaries, or enrollees may have cost-sharing 
liability, or can be informed of this negotiated rate by their 
contracted PBM.
---------------------------------------------------------------------------

    \188\ ``How are prescription drug costs really determined?'' 
Biotechnology Innovation Organization. Available at: https://www.drugcostfacts.org/prescription-drug-costs.
---------------------------------------------------------------------------

    The Departments do not agree that prescription drug pricing 
information, such as negotiated rates, will confuse consumers. As 
discussed elsewhere in this preamble, the Departments recognize that 
the information included in the machine-readable files may not be easy 
for an average consumer to navigate and expect that third-party 
developers will use this information to make tools available that make 
this information more useful for the average consumer.
    The Departments agree with commenters who acknowledged the 
existence of many tools that provide prescription drug prices. However, 
the Departments are of the view that existing prescription drug pricing 
tools are insufficient as they lack competitive pricing information 
across all PBMs, and health plans and issuers.\189\ Once prescription 
drug pricing is made more fully available, health care providers will 
have greater opportunity to factor pricing information into their 
prescribing decisions. Many health care providers benefit financially 
when they can reduce costs and improve their patients' medication 
adherence.\190\ This benefit to providers can also have a significant 
impact on overall health care spending.
---------------------------------------------------------------------------

    \189\ Galewitz, P. ``Doctors Slow To Adopt Tech Tools That Might 
Save Patients Money On Drugs.'' NPR. July 5, 2019. Available at: 
https://www.npr.org/sections/health-shots/2019/07/05/738283044/doctors-slow-to-adopt-tech-tools-that-might-save-patients-money-on-drugs.
    \190\ Id.
---------------------------------------------------------------------------

    For these reasons, and those discussed more fully below, the 
Departments are finalizing, with modifications from the proposed rules, 
requirements to disclose pricing information for prescription drugs 
through a machine-readable file. However, reflecting the unique 
attributes of prescription drug pricing, the final rules respond to 
comments by adopting requirements that are more detailed than what was 
included in the proposed rules, including the inclusion of a third 
machine-readable file for prescription drug pricing information.
    The final rules require plans and issuers to produce a third 
machine-readable file for reporting prescription drug pricing 
information, the Prescription Drug File, whereas the proposed rules 
would have required plans and issuers to include negotiated rates for 
covered prescription drugs in the In-network Rate File. The Departments 
have made this change to ensure that prescription drug pricing 
information is produced in a manner that is most useful to the public. 
As noted earlier in this preamble, there are upwards of 100,000 NDCs 
for prescription drugs. Divorcing negotiated rates for prescription 
drugs from negotiated rates for other items and services allows the 
pricing information for medical items and services to be discernible 
from pricing information for prescription drugs. Further, a PBM may 
administer pharmacy benefits for a plan or issuer in addition to any 
other services it may provide to a plan or issuer. Therefore, keeping 
prescription drugs pricing data separate from pricing data for other 
items and services is generally better aligned with plan and issuer 
operations and will reduce the burden associated with combining data 
from different sources. As discussed in the Information Collection 
Requests (ICR) section of this preamble, the Departments estimate that 
the Prescription Drugs File requirement will not add significantly to 
the development and maintenance costs of the machine-readable files 
because the cost and burdens related to prescription drugs will largely 
be transferred from the In-network Rate File to the Prescription Drug 
File. Additionally, the Departments anticipate that removal of 
prescription drugs from the In-network Rate Files will significantly 
reduce the size of those files, which could reduce the costs associated 
with maintenance and storage of each individual file. The Departments 
are of the view that removing prescription drugs from the In-network 
Rate File and requiring this information to be included in a separate 
Prescription Drug File is consistent with the Departments' goal of 
separating fundamentally different types of data into distinct files. 
Because, as many commenters observed, prescription drug prices are 
unique, the Departments are of the view that this information would be 
more appropriately represented through a third machine-readable file. 
Furthermore, the updated machine-readable file structure will support 
consumers, researchers, and third-party developers in reviewing, 
ingesting, aggregating, and analyzing the data.
The Disclosure of Prescription Drugs Pricing Information
    Under the proposed rules, group health plans and health insurance 
issuers would be required to publicly disclose negotiated rates in the 
In-network Rate file. The Departments defined negotiated rates in the 
proposed rule as the amount a group health plan or health insurance 
issuer, or a third party on behalf of a group health plan or health 
insurance issuer, has contractually agreed to pay an in-network 
provider for covered items and services, pursuant to the terms of an 
agreement between the provider and the group health plan or health 
insurance issuer, or a third party on behalf of a group health plan or 
health insurance issuer. As discussed in the Definitions section of 
this preamble, the final rules adopt this definition as proposed, with 
modifications to provide additional clarity.
    In the preamble to the proposed rules, the Departments acknowledged 
that cost-sharing liability for prescription drugs is often based on an 
amount other than the negotiated rate, such as manufacturer list prices 
or undiscounted list prices such as AWP or

[[Page 72235]]

WAC. The Departments further acknowledged that, because of the 
application of rebates and other discounts, the inclusion of just the 
negotiated rate for prescription drugs could mislead consumers because 
the rate paid by the plan could ultimately be lower than the price paid 
by the consumer at the point-of-sale, as it is the Departments' 
understanding that these rebates and other discounts typically are not 
passed on to the consumers at the point of sale. The Departments 
expressed the concern that including only the negotiated rate for 
prescription drugs used to determine cost-sharing liability could 
perpetuate the lack of transparency surrounding prescription drug 
pricing. To this end, the Departments solicited comment on which 
pricing information related to prescription drugs should be 
disclosed.\191\
---------------------------------------------------------------------------

    \191\ The Departments note that this discussion in the preamble 
to the proposed rules occurred in the context of the third content 
element (negotiated rates) for the internet-based self-service tool. 
However, as negotiated rates were a proposed content element for the 
machine-readable files, the Departments are of the view that the 
comments received regarding negotiated rates in the context of the 
internet-based self-service tool are equally applicable to the 
prescription drug disclosures plans and issuers are being required 
to make through the machine-readable files. The definition of 
``negotiated rate'' for prescription drugs applies to both the 
internet-based self-service tool and machine-readable file 
provisions. Regarding the machine-readable files, the Departments 
proposed that plans and issuers be required to include in-network 
negotiated rates and out-of-network allowed amounts for all covered 
items and services. In the Departments' view, the use of the same 
term regarding both requirements underscores the relevance of these 
comments to all disclosure requirements applicable to items and 
services, including those applicable to prescription drugs. 
Furthermore, several commenters did not clearly separate their 
comments regarding the internet-based self-service tool and the 
machine-readable files and provided broad comments that applied to 
all relevant sections of the proposed rules.
---------------------------------------------------------------------------

    Despite the Departments' concerns regarding negotiated rates for 
prescription drugs outlined in the preamble to the proposed rules, 
commenters responded that negotiated rates, in addition to other 
information, are an important data point necessary to achieving useful 
transparency into coverage and out-of-pocket costs for prescription 
drugs. Several commenters recommended that the machine-readable file 
include both the negotiated price and the undiscounted ``list'' price, 
upon which coinsurance and deductibles are often based, in order to 
promote competition. Other commenters suggested that plans and issuers 
should disclose to enrollees when they do not pass through manufacturer 
rebates and discounts at the point-of-sale or factor these amounts into 
enrollee cost sharing. Another commenter recommended the Departments 
consider requiring a ``net price'' for prescription drugs rather than 
the negotiated rates. This commenter stated that, it is vital that this 
``negotiated rate'' also include the ``net price'' (which accounts for 
all price concessions, including direct and indirect remuneration fees 
(DIR) and/or similar policies/terminology, such as ``true up'' 
practices under employer-sponsored and private plans to accurately 
estimate participant, beneficiary, and enrollee cost-sharing liability 
for prescription drugs). One commenter noted that if the public 
disclosure did not include information related to rebates, the file 
could be misleading and could lead to a continuing overemphasis on 
prescription drug list prices without recognition of the role played by 
rebates.
    Another commenter recommended that the Departments allow plans and 
issuers to report the most appropriate available price type based on 
the plan's benefit design. This commenter suggested that plans should 
also be required to identify the price reported, such as AWP or WAC or 
the contracted pharmacy reimbursement amount (for example, the Part D 
negotiated price).
    The Departments have closely reviewed the comments to determine the 
prescription drug pricing information plans and issuers should provide 
in the Prescription Drug File in order to achieve the goals of 
transparency. Based on this review, the final rules are adopting as 
content element three for the Prescription Drug File a requirement for 
plans and issuers to publicly disclose two amounts for prescription 
drugs in the Prescription Drug File: The negotiated rate and the 
historical net price.
Prescription Drug Negotiated Rate Disclosure
    As evidenced by the comments and the Departments' independent 
research, there is wide variability in how negotiated rates are 
assigned for prescription drugs. For instance, some commenters noted 
that negotiated rates for prescription drugs include rebates, price 
concessions, and other ``true-ups, while others likened the negotiated 
rates to the undiscounted list price used for determining cost-sharing 
liability. Therefore, plans and issuers may use varying types of prices 
when reimbursing providers for prescription drugs. For example, it is 
the Departments' understanding that for generic prescription drugs, the 
Maximum Allowable Cost (MAC)--an amount the plan or issuer uses as the 
maximum amount they will pay for a particular prescription drug 
product--may be the amount that plans and issuers use to pay providers 
for a prescription drug. Plans and issuers may reimburse providers for 
other prescription drugs using a UCR amount or an amount based on the 
undiscounted list price, such as AWP or WAC. It is the Departments' 
understanding that contracts negotiated between plans and issuers (or 
their contracted PBM) and providers generally do not include specific 
negotiated rates for prescription drugs, but instead include formulas 
that determine the type of price that will be used to reimburse 
providers for a particular prescription drug product. The negotiated 
rate may differ by drug or class of drug in the contract as the lesser 
of several types of prices based on one of the benchmarks described 
above--that is, WAC, AWP, MAC, or UCR. Because prices for prescription 
drugs can fluctuate on a daily basis, the price that is used to 
reimburse the provider can also fluctuate based on application of the 
contract terms.
    In addition to better appreciating the wide variability in how 
negotiated rates are assigned, the Departments also now understand 
based on comments and independent research, that, contrary to the 
Departments' understanding as explained in the preamble to the proposed 
rule, no matter what benchmark or formula is used to determine the 
negotiated rate, the negotiated rate is frequently also the rate upon 
which cost-sharing liability is based for prescription drugs.
    Based on the circumstances described above, the Departments 
therefore agree with commenters that a certain amount of flexibility is 
required for plans and issuers as it relates to the benchmarks and 
inputs required for the disclosure of negotiated rates for prescription 
drugs. To allow for flexibility, as proposed, the final rules do not 
assign a benchmark or necessary inputs to the definition of negotiated 
rates. The final rules include a broad definition for negotiated rates 
to mean the amount a group health plan or health insurance issuer has 
contractually agreed to pay an in-network provider, including an in-
network pharmacy or other prescription drug dispenser, for covered 
items and services, whether directly or indirectly, including through a 
TPA or PBM.
    As noted above, the negotiated rate can be one of several different 
rates and can fluctuate on a daily basis depending on the terms of the 
contract between plans or issuers (or the PBM for the plan or issuer) 
and the provider, which

[[Page 72236]]

includes pharmacies and other prescription drug dispensers. Therefore, 
the Departments clarify that, where a plan or issuer uses a formula as 
described above to determine the rate that will be used to reimburse 
providers for a prescription drug, the negotiated rate that should be 
included in the Prescription Drug File should be the rate that would be 
used by the plan or issuer to reimburse providers on the date that the 
file is extracted.
    Notably, the final rules do not finalize a requirement to include 
the manufacturer list price, as contemplated in the proposed rules. The 
manufacturer list price is a manufacturer-specified metric for drug 
prices that is commonly used by both Federal and commercial health care 
programs as a benchmark for negotiated rates. The manufacturer list 
price in this context is often the WAC, which is defined in statute as, 
the manufacturer's list price for the drug or biological to wholesalers 
or direct purchasers in the United States, not including prompt pay or 
other discounts, rebates or reductions in price, for the most recent 
month for which the information is available, as reported in wholesale 
price guides or other publications of pricing data with respect to a 
drug or biological.\192\
---------------------------------------------------------------------------

    \192\ 42 U.S.C. 1395w-3a(c)(6).
---------------------------------------------------------------------------

    Like negotiated rates, the list price does not include discounts, 
dispensing fees, rebates, or other retrospective pricing adjustments. 
The manufacturer list price is not plan- or issuer-specific. If the 
Departments were to require plans and issuers to include the 
manufacturer list price in the Prescription Drug File, the information 
included in the files would be the same or similar across all plans and 
issuers. Further, manufacturer list price information is already 
aggregated, available through several companies, and could be 
incorporated into third party applications to be made accessible to 
consumers. WAC prices for drugs and biologics are collected and 
published by several companies, including First Databank and Medi-Span. 
Additionally, CMS publishes a monthly National Average Drug Acquisition 
Cost (NADAC), which provides a national benchmark for the prescription 
drug prices paid by retail pharmacies.\193\ Because information on 
manufacturer list prices would be largely redundant across plans and 
issuers, and because this information is publicly available through 
other existing resources, the Departments concluded this information 
would be of limited value for the public.
---------------------------------------------------------------------------

    \193\ ``National Average Drug Acquisition Cost.'' Centers for 
Medicare & Medicaid Services. September 15, 2020. Available at: 
https://data.medicaid.gov/Drug-Pricing-and-Payment/NADAC-National-Average-Drug-Acquisition-Cost-/a4y5-998d.
---------------------------------------------------------------------------

    The Departments do not intend to increase the burden of developing 
and maintaining the machine-readable files unless the inclusion of the 
additional data element is essential to provide meaningful, transparent 
pricing information to the public. Inclusion of the manufacturer list 
price would not significantly advance transparency as this information 
is already available publicly, and it would increase the burden of 
developing the Prescription Drug File. The Departments expect that 
third-party developers will access and incorporate publicly available 
databases, such as those including manufacturer list pricing 
information, where that information is relevant to providing meaningful 
information to consumers.
    The Departments are of the view that it is important for 
transparency for negotiated rates to be included in the Prescription 
Drug File. Consumers, both insured and uninsured, can use this 
information to better understand the cost of prescription drugs and to 
advocate for less expensive alternatives. The Departments are also of 
the view that making the negotiated rate public in a manner that is 
highly visible to consumers, researchers, innovators and regulators 
could potentially place pressure on manufacturers to lower their list 
prices, which could, in turn, lower negotiated rates upon which 
consumer cost-sharing liability is based.
    Nonetheless, as stated in this preamble and in the preamble to the 
proposed rules, requiring disclosure of only the negotiated rate for 
prescription drugs could perpetuate the lack of transparency 
surrounding prescription drug pricing. As commenters noted, the 
negotiated rate is not generally tied to the amount a plan or issuer 
will ultimately pay for the prescription drug or prescription drug 
service due to the use of post-point-of-sale rebates, discounts, and 
other price concessions that reduce the price that plans and issuers 
pay for prescription drugs. To address this issue and to introduce 
greater transparency surrounding prescription drug pricing, in response 
to comments, the Departments are also finalizing a requirement that 
plans and issuers must publicly disclose historical net prices, as 
discussed in detail below.
Prescription Drug Historical Net Price Disclosure
    For purposes of the final rules, historical net price means the 
retrospective average amount a plan or issuer paid for a prescription 
drug, inclusive of any reasonably allocated rebates, discounts, 
chargebacks, fees, and any additional price concessions received by the 
plan or issuer with respect to the prescription drug. Net price is the 
price for a prescription drug after discounts are deducted, and is paid 
at different points in the prescription drug distribution chain (for 
example, the plan or issuer to the pharmacy, the pharmacy to a 
wholesaler, and the wholesaler to the manufacturer).\194\ For the 
purposes of the final rules, the Departments are concerned with the 
price ultimately paid by a plan or issuer to a drug manufacturer.\195\ 
Essentially, rebates, discounts, chargebacks, fees, and other 
additional price concessions are adjustments made after the point-of-
sale that affect the total price paid by the plan or issuer (or through 
a contract with the PBM) to the manufacturer for a prescription drug 
product. As a general matter, a price concession is a discount or 
rebate available to a purchaser of a product or service, wherein the 
discount or rebate is conditioned upon the purchaser complying with the 
contractual terms of the rebate or discount offer.\196\ More 
specifically, a rebate is an amount that the prescription drug 
manufacturer returns to a payer based on utilization by consumers 
enrolled through a plan or issuer or based on purchases by a 
provider.\197\ A chargeback is a type of discount process through a 
prescription drug wholesaler where manufactures reimburse wholesalers 
who offer drugs to purchasers at discounted prices, and the discount 
negotiation occurs between the manufacturer and the purchaser.\198\ 
Finally, fees include any payment adjustments, incentives, or other 
discounts that are not included in the negotiated price for a drug (for 
example, prompt pay discounts, pharmacy network fees, performance-based 
fees, and incentive fees).\199\ The Departments

[[Page 72237]]

note that manufacturers also may offer additional price concessions to 
certain providers or directly to consumers in the form of coupons. The 
final rules only require disclosure of reasonably allocated rebates, 
discounts, chargebacks, fees, and any additional price concessions 
received by the plan or issuer (or the PBM under contract with the plan 
or issuer).
---------------------------------------------------------------------------

    \194\ ``AMCP Guide to Pharmaceutical Payment Methods, 2013 
Update'' Academy of Managed Care Pharmacy. 2013. Available at: 
https://www.amcp.org/sites/default/files/2019-03/Full-Pharmaceutical-Guide-%283.0%29.pdf.
    \195\ The Departments note that each plan or issuer (or the PBM 
acting under contract with the plan or issuer) may utilize a 
different combination of price concessions.
    \196\ ``AMCP Guide to Pharmaceutical Payment Methods, 2013 
Update. Academy of Managed Care Pharmacy. 2013. Available at: 
https://www.amcp.org/sites/default/files/2019-03/Full-Pharmaceutical-Guide-%283.0%29.pdf.
    \197\ Id.
    \198\ Id.
    \199\ ``Final Medicare Part D DIR Reporting Requirements for 
2017.'' Centers for Medicare & Medicaid Services. Available at: 
https://www.cms.gov/Research-Statistics-Data-and-Systems/Computer-Data-and-Systems/HPMS/HPMS-Memos-Archive-Weekly-Items/SysHPMS-Memo-2018-May-30th.
---------------------------------------------------------------------------

    As noted earlier, several commenters commented on the nature of the 
prescription drug pricing information that should be captured to 
achieve the goals of price transparency. Some commenters noted the net 
price would be important to price transparency efforts because it would 
put consumers on notice when the net price is less than their cost-
sharing amount and it would capture the actual prices of prescription 
drugs after the application of price concessions, which would provide 
transparency regarding actual prescription drug costs. The Departments 
agree with these commenters that disclosure of information about the 
net price for prescription drugs (and therefore rebates and other price 
concessions that are included in the net price) is necessary to achieve 
the goals of the final rules.
    Therefore, the final rules adopt a requirement to make public a 
historical net price, as defined by the final rules. Furthermore, 
rather than require disclosure of the actual net price, the final rules 
establish and adopt a definition of historical net price that balances 
the need for transparency against concerns expressed by other 
commenters that release of net prices could affect issuers and PBMs' 
ability to negotiate drug prices, including rebates and other price 
concessions. Specifically, the final rules define historical net price 
as the retrospective average amount a plan or issuer paid an in-network 
provider, including any in-network pharmacy or other prescription drug 
dispenser, for a prescription drug, inclusive of any reasonably 
allocated rebates, discounts, chargebacks, fees, and any additional 
price concessions received by the plan or issuer with respect to the 
prescription drug or prescription drug service. The Departments note 
that for the purposes of the final rules, the definition of historical 
net price only includes those price concessions received by the plan or 
issuer (or under the contract between the PBM and the plan or issuer). 
Because of timing delays related to application of rebates, discounts, 
chargebacks, fees, and other price concessions, plans and issuers are 
required to provide historical or retrospective data, rather than 
prospective or current pricing data regarding the net price of 
prescription drugs. In the case prescription drug net prices, 
historical data will provide valuable information for stakeholders, as 
the actual prices plans and issuers ultimately pay for prescription 
drugs cannot be known until after the application of time-delayed 
rebates, discounts, chargebacks, fees, and other price concessions. As 
discussed later in this section, plans and issuers will be required to 
include historical net prices for a 90-day period beginning 180 days 
before the date a particular Prescription Drug File is published. The 
final rules also require the historical net price, as defined earlier 
in this section, to be disclosed through the Prescription Drug File.
    As discussed earlier in this preamble, the Departments are aware 
that an estimated allocation of rebates, discounts, chargebacks, fees, 
and any other additional price concessions may be necessary to 
represent the historical net price. Product-specific and non-product 
specific rebates, discounts, chargebacks, fees, and other price 
concessions must be allocated by dollar value if the total amount of 
the price concession is known to the plan or issuer at the time of file 
publication. It is the Departments' understanding that most discounts, 
such as those related to market sharing and rebates based on volume, 
are calculated within time periods as short as one to three months. 
Therefore, the Departments expect the total amounts for these types of 
discounts, rebates, and other price concessions will be known at the 
time of file publication. Where the total amount of a price concession 
is known at the time of file publication, plans and issuers must 
allocate the price concession by the total dollar amount.
    The Departments also understand that some product-specific and non-
product specific price concessions are based upon outcomes- or value-
based payment arrangements that calculate rebates over a longer period 
of time--usually six months to more than three years. Because these 
price concessions will not be known at the time of file publication, 
the Departments are requiring plans and issuers to estimate the 
historical net price using a reasonable allocation and good faith 
estimate of the total concession amount. Therefore, if the total amount 
of the price concession is not known to the plan or issuer at the time 
of file publication, then rebates, discounts, chargebacks, fees, and 
other price concessions should be reasonably allocated using an 
estimate of the average price concessions based on the rebates, 
discounts, chargebacks, fees, and other price concessions received over 
a time period prior to the current reporting period and of equal 
duration to the current reporting period.
    Rebates may reflect discounts negotiated with drug manufacturers 
that lower drug prices for the plan or issuer. Rebates may not directly 
benefit participants, beneficiaries, or enrollees, however, as the 
decision of whether and how to share savings from rebates is at the 
discretion of the plan or issuer. Nonetheless, there is evidence that 
rebates are positively correlated with increased manufacturer list 
prices for prescription drugs, which is typically the basis for a 
consumer's cost-sharing liability.\200\ A recent analysis found that, 
on average, from 2015 to 2018, a $1 increase in rebates was associated 
with a $1.17 increase in manufacturer list prices.\201\ Therefore, due 
to the positive correlation between rebates and manufacturer list 
prices, a policy that results in a reduction to rebates may result in a 
reduction in the manufacturer list price (and also overall prescription 
drug prices). A policy that requires plans and issuers to make public 
historical net prices could expose the extent of rebates and other 
price concessions, and this transparency in historical net price could 
cause a reduction in the use of rebates and other price concessions, 
and, therefore, a reduction in the manufacturer list price.\202\ The 
resulting reductions in manufacturer list price could lead to lowered 
out-of-pocket costs for both uninsured consumers who must pay the 
manufacturer list price and insured consumers with deductibles and 
coinsurance. Because negotiated rates for prescription drugs are 
largely based upon the manufacturer list price, the reduction in the 
manufacturer list price will likely be reflected in the negotiated 
rate. Further, because negotiated rates are used to determine cost-
sharing liability for prescription drugs, a reduction in such rates 
will likely result in lower consumer costs through a reduction to 
deductibles and coinsurance.
---------------------------------------------------------------------------

    \200\ Sood, N., et al. ``The Association Between Drug Rebates 
and List Prices.'' U.S.C. Schaeffer Center for Health Policy and 
Economics. February 11, 2020. Available at: https://healthpolicy.usc.edu/research/the-association-between-drug-rebates-and-list-prices/.
    \201\ Id.
    \202\ Id.
---------------------------------------------------------------------------

    The Departments are of the view that requiring both the negotiated 
rate and the historical net price, as defined by the final rules, will 
produce sufficient transparency regarding prescription drug pricing 
information to support consumer health care purchasing

[[Page 72238]]

decisions and provide other stakeholders insight into actual 
prescription drug pricing. Inclusion of both the negotiated rate and 
historical net price addresses the Departments' concern, expressed in 
the preamble to the proposed rules, that merely requiring disclosure of 
the rate that is used to determine an individual's cost-sharing 
liability (that is, as clarified in the final rules, the negotiated 
rate) could perpetuate the lack of transparency in prescription drug 
pricing.
    Additionally, in the preamble to the proposed rules, the 
Departments specifically solicited comment on whether and how the 
public disclosure requirements should account for rebates, discounts, 
and dispensing fees to ensure individuals have access to meaningful 
cost-sharing liability estimates for prescription drugs.\203\ Upon 
review of the comments, the Departments are of the view that public 
disclosure of the historical net price, which takes into account 
rebates, discounts, dispensing fees, and other price concessions, in 
addition to the negotiated rate, upon which cost sharing is based, 
provides the appropriate combination of pricing information to achieve 
the goals of transparency and ensure that individuals have access to 
meaningful prescription drug pricing information. First, the negotiated 
rate will help support consumer health care purchasing decisions. 
Second, the historical net price will support the public in gaining 
enhanced knowledge of actual drug prices. Enhanced knowledge of actual 
drug historical net prices could also support consumer health care 
purchasing decisions, as consumers could use the information to 
determine whether their out-of-pocket costs are commensurate with the 
rebates, discounts, and other price concessions received by their plan 
or issuer. The historical net price will also make consumers and other 
stakeholders aware of situations where cost-sharing liability for a 
prescription drug exceeds the amount their plan or issuer ultimately 
paid for the prescription drug. In these situations, participants, 
beneficiaries, and enrollees will be able to make an informed decision 
regarding whether to utilize their plan or coverage when purchasing the 
prescription drug. Furthermore, plans and issuers could be incentivized 
to pass through a larger or more significant share of the rebates and 
other discounts that they receive from drug manufacturers if those 
discounts are effectively disclosed via historical net price 
information.
---------------------------------------------------------------------------

    \203\ 84 FR 65464, 65472 (Nov. 27, 2019).
---------------------------------------------------------------------------

    The Departments acknowledge that there are potential adverse 
consequences of requiring plans and issuers to make public rebates and 
other price concessions, directly or indirectly, through the historical 
net price. For instance, stakeholders such as PBMs and prescription 
drug manufacturers could attempt to find ways to obscure rebates and 
other price concessions such that they would not be required to be 
publicly disclosed under the final rules. However, the Departments are 
of the view that such attempts would likely be discouraged by the 
nature of the disclosures themselves and would otherwise be 
unsuccessful if attempted. A benefit of requiring the widespread public 
disclosure of pricing information for prescription drugs is that the 
transparency data itself can be used to identify where plans and 
issuers (or third parties acting on their behalf) may be attempting to 
circumnavigate disclosure requirements. Researchers and other entities 
who aggregate and analyze the data will be able to compare pricing data 
across plans and issuers. This can help identify plans and issuers 
whose data is an outlier and identify them for further scrutiny by 
regulators. The current lack of transparency in prescription drug 
pricing does not allow this type of oversight and monitoring. While it 
is possible that stakeholders will act in ways that conflict with the 
intent of the public disclosures, it is also very likely that 
transparency itself will help state and local regulators to identify 
these anti-competitive practices. Indeed, it is possible that the 
public disclosures could help to uncover other unknown anti-competitive 
business practices that exist today. For these reasons, the Departments 
are of the view that the benefits of public disclosure of prescription 
drug pricing information outweigh the potential risk that certain 
stakeholders may seek to take advantage of the disclosure requirements 
in ways that would increase prescription drug costs.
    A commenter observed that if the Departments were to include the 
net price, it would be important to clarify that that the information 
is not necessarily predictive of future transactions because 
information about rebates is not known with certainty before a drug is 
dispensed. The Departments recognize that prospective net prices for 
prescription drugs could be complicated to estimate accurately due to 
the nature of prescription drug pricing. Nonetheless, the Departments 
are of the view that the historical net price will be a sufficiently 
accurate guide for potential prescription drug prices and will fulfill 
the objectives of the final rules.
    The final rules adopt a requirement to include in the Prescription 
Drug File the historical net price over a 90-day reporting period for 
each NDC for dates of service within 180 days of the Prescription Drug 
File publication date. This approach will ensure that data is composed 
of the historical net price for relatively recent claims (rather than 
older claims from multiple time periods) and will avoid the conflation 
of payments from different periods of time. The Departments are of the 
view that historical net prices from defined periods of time will 
enable users to make meaningful comparisons across plans and coverages. 
Additionally, the Departments chose this reporting reference period to 
be consistent with the period proposed and being finalized through the 
final rules for reporting of allowed amounts through the Allowed 
Amounts File. The Departments are of the view that consistency across 
machine-readable file requirements, where applicable, will reduce 
potential confusion among file users as well as reduce burdens for 
plans and issuers. The Departments are of the view that the 180-day 
lookback period (which is expected to capture many of the market-share 
and volume rebates and other price concessions) and requirement to make 
a reasonable allocation will balance the need to be transparent in 
current prices with the delayed timing of the application of certain 
rebates and other price concessions.
    To reasonably allocate any particular non-product specific or 
product-specific rebate, discount, chargeback, fee, or other additional 
price concession by dollar value of the drug where the totals amount is 
fully known at the time of file publication, plans and issuers should 
divide the rebate or discount amount by the total dollar value of drugs 
on which the rebate is calculated, and then apply that percentage to 
all applicable drugs. For example, if a rebate amount of $20,000 is 
received during the 3-month file reference period in connection with 
$100,000 in sales on two drugs during the same period, the rebate is 
allocated as a 20 percent discount to the prices of those two drugs. 
Sales for Drug A totaled $60,000 and sales for Drug B totaled $40,000. 
A rebate of $12,000 ($60,000 multiple by 20 percent) is allocated to 
Drug A, resulting in a historical net price populated in the 
Prescription Drug File of $48,000. Similarly, a rebate of $8,000 is 
allocated to Drug B, resulting in a historical net price populated in 
the Prescription drug file of $32,000. The Departments are

[[Page 72239]]

aware that this allocation methodology will not always perfectly 
allocate the rebate amounts because of the complexities of rebate 
calculation, or because of timing issues. However, the Departments are 
of the view that this simplified approach balances the goal of 
providing actionable drug pricing information to the public while 
limiting the burdens on plans and issuers in producing the information.
    To reasonably allocate any particular non-product specific or 
product-specific rebate, discount, chargeback, fee, or other additional 
price concession where the total amounts are not fully known at the 
time of file publication, plans and issuers must make a good faith, 
reasonable estimate of the price concession using an historical 
adjustment amount. To make this estimate, plans and issuers shall 
determine the average value of price concessions for the relevant 
product over a time period prior to the current reporting period and of 
equal duration to the current reporting period and use that amount to 
apply an estimated adjustment amount in the current reporting period. 
For example, Plan X has $100,000 in total sales for 20,000 units--
averaging $5 per unit--of Drug A during the current reporting period, 
which is January 1, 2020, through March 31, 2020. However, Plan X will 
not know the total amount of product-specific rebate to expect for 
sales of Drug A for at least another six months. To address this timing 
issue, Plan X can apply a reasonable estimate to allocate an adjustment 
to the current reporting period. For instance, Plan X can look back to 
the total rebates received for the product during a comparable time 
period. In this example, Plan X reviews its historical data and 
determines the rebates received for Drug A, from the period between 
January 1, 2019, and March 31, 2019, totaled $10,000 for sales of 
30,000 units totaling $160,000. The average price per unit was $5.33 
and the average discount per unit was $0.33 resulting in an average 
final net price of $5 for Drug A. Plan X then applies this historical 
rebate percentage to the current reporting period for Drug A. Plan X 
subtracts $6,250 ($100,000 total sales for the current reporting period 
multiplied by the estimated 6.25 percent historical rebate percentage) 
from the $100,000 total sales for a total net price of $93,750 and an 
average net price for Drug A, rounded to the nearest hundredth, of 
$4.69. Plan X reports in the Prescription Drug File an average 
historical net price for Drug A of $4.69 for the current reporting 
period.
    In the discussion of the Allowed Amounts File in the preamble to 
the proposed rules, the Departments noted that providing the Allowed 
Amounts information could raise health privacy concerns. The 
Departments are of the view that similar concerns could be raised 
regarding the historical net price information in the Prescription Drug 
File. For example, there may be instances--such as in a small group 
plan or with respect to an NDC for a rare chronic condition--where, 
through deduction, disclosure of historical net price information may 
enable users to identify the participant, beneficiary, or enrollee who 
received a particular prescription drug because a very small number of 
claims are used to derive the historical net price of a particular NDC 
at a particular pharmacy or other prescription drug dispenser. 
Additionally, as noted in relation to the Allowed Amount File, there 
may also be instances when the historical net price public disclosure 
requirement would be inconsistent with Federal or state laws governing 
health information that are more stringent than HIPAA regarding the 
use, disclosure, and security of health data that was produced pursuant 
to a legal requirement, such that plans and issuers would be required 
to further de-identify data. For example, some of the claims for 
payment used to derive the historical net price could relate to 
services provided for substance use disorders, which could implicate 
disclosure limitations under 42 CFR part 2 governing the 
confidentiality of patient records related to treating a substance use 
disorder. The Departments are committed to protecting PHI. To address 
privacy concerns, the final rules adopt an approach consistent with the 
out-of-network Allowed Amount File. The final rules do not require 
plans and issuers to provide historical net price data in relation to a 
particular pharmacy or other prescription drug dispenser and a 
particular NDC when compliance would require a plan or issuer to report 
an historical net price for a particular pharmacy or other prescription 
drug dispenser calculated with fewer than 20 different claims for 
payment. Furthermore, the Departments note that disclosure of 
historical net prices will not be required if compliance would violate 
applicable health information privacy laws. The Departments are of the 
view that these mitigation strategies, in addition to the historical 
net price being an average of amounts paid to a particular provider for 
a particular NDC during the reference period, are sufficient to protect 
patients from identification based on information in the Prescription 
Drug File. The Departments note that the low volume exemption applies 
only to the requirement to include the historical net price and does 
not affect the requirement to include the negotiated rates in the 
Prescription Drug File.
    Regarding prescription drugs, the Departments received a comment 
that requested discounts under section 340B of the PHS Act be included 
in the applicable machine-readable file, noting that providing this 
information is important to ensure consumers can access those savings. 
However, this commenter acknowledged that health plans often do not 
have access to information about when a section 340B discount is paid 
and so recommended the Departments develop and implement a process to 
help health plans identify this information.
    Discounts under the section 340B Drug Pricing Program are only 
available to eligible providers (known as covered entities as outlined 
in section 340B of the PHS Act) and regulations under section 340B of 
the PHS Act are outside of the scope of the final rules.
2. Required Method and Format for Disclosing Information to the Public
    As explained in section II.C.1.c of this preamble, the final rules 
adopt the requirement that plans and issuers produce the In-network 
Rate File, the Allowed Amount File, and the Prescription Drug File. The 
Departments are finalizing a requirement that the In-network Rates, 
Allowed Amounts, and Prescription Drug Files must be disclosed as 
machine-readable files. The final rules define ``machine-readable 
file'' to mean a digital representation of data or information in a 
file that can be imported or read by a computer system for further 
processing without human intervention, while ensuring no semantic 
meaning is lost. The requirement ensures that the machine-readable file 
can be imported or read by a computer system without those processes 
resulting in alterations to the ways data and commands are presented in 
the machine-readable file. The Departments proposed to require each 
machine-readable file to use a non-proprietary, open format to be 
identified by the Departments in technical implementation guidance (for 
example, JavaScript Object Notation (JSON), Extensible Markup Language 
(XML), or Comma Separate Value(s) (CSV)). A portable document format 
(PDF) file, for example, would not meet this definition due to its 
proprietary nature.
    Contemporaneous with the proposed rules, the Departments published 
a PRA package (OMB control number: 0938-1372 (Transparency in Coverage 
(CMS-

[[Page 72240]]

10715)) that further described the specific data elements that would be 
disclosed in the proposed machine-readable files. Updated cost and 
burden estimates related to the collection requirements are discussed 
in the ICR section of this preamble and are included in in the 
corresponding PRA package, including changes to costs and burdens and 
additional collection instruments as a result of modifications to the 
proposed rule made through the final rules.
    The Departments proposed requiring group health plans and health 
insurance issuers to publish their negotiated rates and historical 
allowed amount data in two machine-readable files, one including 
required negotiated rate data with in-network providers, and a second 
including required out-of-network allowed amount data. The Departments 
proposed requiring plans and issuers to publish the data in two 
separate machine-readable files to account for the dissimilarity 
between the negotiated rates paid to in-network providers under 
contract and the more variable allowed amounts paid to out-of-network 
providers. The Departments solicited comment on whether building and 
updating one file could be less burdensome for plans and issuers than 
maintaining multiple files, and whether having the data in a single 
file could facilitate use by third-party developers. The Departments 
were particularly interested in comments regarding whether a single 
file for disclosure of all the required information would likely be 
extremely large, making it less than optimal for anticipated users, 
such as software application developers and health care researchers.
    Some commenters supported keeping the In-network Rates File and 
out-of-network Allowed Amount File separate. One commenter noted the 
structure would allow quick development of data aggregation efforts and 
consumer-friendly tools. Additionally, the commenter stated that 
keeping the files separate would support file ingestion. Another 
commenter stated that each file would contain fundamentally different 
data, and the costs associated with storing and maintaining a large 
combined file would be very large.
    The Departments agree that the information being required to be 
publicly disclosed through the machine-readable files related to 
negotiated rates and allowed amounts is sufficiently distinct to 
justify separating the information into separate files. In particular, 
the out-of-network allowed amounts information must be derived from 
historical claims data, which is fundamentally different in kind from 
simply listing applicable rates for each service. Furthermore, the 
Departments also agree with comments indicating that splitting the 
files would help reduce the maintenance and storage burdens of the 
files. Throughout this preamble, the Departments have stressed the 
importance of ensuring the public disclosures required through the 
final rules are accessible, especially to internet-based and mobile 
application developers, to support development of innovative consumer-
facing tools, as well as to other entities, such as researchers, and 
regulators, to support efforts to better understand and support the 
competitiveness of health care markets.
    The requirement to publish more than one machine-readable file 
which will facilitate the disclosure of data that is different in 
character, scope, and other factors, which will help facilitate data 
ingestion for users of the machine-readable files, including third-
party developers, researchers, regulators, and other interested 
parties. This approach will also help facilitate file ingestion, data 
aggregation, and data analysis by researchers whose projects could lead 
to important market insights that could inform efforts to further 
address the wide variation in health pricing, and by regulators who 
would be able to leverage the data in their oversight activities.
    As discussed earlier in this preamble, the final rules adopt a 
third Prescription Drug File in recognition of the unique pricing 
attributes of prescription drug products. Prices related to 
prescription drug products that plans and issuers would have been 
required to include in the In-network Rate File under the proposed 
rules will now be required to be publicly disclosed through the third 
Prescription Drug File. As discussed earlier in this preamble, the 
Departments estimate that requiring a third file for prescription drugs 
will not add significantly to the burdens and costs of developing and 
maintaining the machine-readable files calculated in relation to the 
final rules because costs and burdens calculated for prescription drugs 
as included in the In-network Rate File will be transferred to the 
Prescription Drug File. Additionally, the Departments anticipate that 
removal of prescription drugs from the In-network Rate File will 
significantly reduce the size of that file, which could reduce the 
costs associated with maintenance and storage for the In-network Rate 
File. The Departments clarify that not all prescription drug pricing 
information required to be disclosed through the final rules is 
required to be included in the Prescription Drug File. Rather, the 
Prescription Drug File is required to include prescription drug pricing 
information for in-network providers, including pharmacies and other 
prescription drug dispensers, while the Allowed Amount File is required 
to include prescription drug pricing information for out-of-network 
providers, including pharmacies and other prescription drug dispensers. 
The Departments also clarify that the In-network Rate file may also 
contain prescription drug information to the extent the prescription 
drug is a part of a bundled payment arrangement.
    Some commenters argued that the method and format for providing 
information to the public is not feasible. One commenter did not 
support the policy that the machine-readable files should be provided 
in a public use file format, claiming the files would be millions of 
rows long and very difficult to review. Another commenter expressed 
concern that the volume of data would make it impossible to post all of 
the information in two files and further stated that there is no single 
set of codes that describe every item or service, so it would be 
impossible to post this data without very specific, standard 
definitions. Given the lack of standard definitions, this commenter 
argued that there is no systematic way to compile and display the 
information requested, so claim compilation would have to be done 
manually. The commenter further stated that, even if there were 
standard definitions, it would be impossible to provide them in ``plain 
language.''
    Based on consultations with industry and IT development 
professionals, the Departments do not agree with commenters who stated 
that development of the machine-readable files would not be feasible as 
envisioned by the proposed rules. The Departments are aware that these 
files could be very large and could be difficult for laypersons to 
navigate. However, the Departments are of the view that the files' 
primary benefit to health care consumers will be the availability of 
web-based tools and mobile applications developed for consumer use by 
third-party developers, aggregation and analysis conducted by 
researchers, and oversight efforts by regulators. The required machine-
readable files will be optimal for ingestion, data aggregation, and 
data analysis, all of which are functions performed by third-party 
internet-based developers, researchers, and regulators who use large 
data sets in a manner that will lead to benefits for consumers. 
Additionally, notwithstanding that the Departments have designed these

[[Page 72241]]

transparency requirements so that it is not necessary that individual 
consumers use or ingest the data in the machine-readable files, the 
Departments are of the view that many individual health care consumers 
do possess the necessary expertise to access and navigate the files. 
The final rules also impose a requirement to include plain language to 
identify each item and service included in each file. This requirement 
will help ensure consumers, third party application developers, 
researchers, regulators, and other interested parties are able to 
easily understand the information.
    The Departments have determined that the potential benefits for 
consumers of requiring the disclosure of required data through machine-
readable files outweigh the potential for consumer confusion at the 
individual consumer level. Additionally, the Departments expect that 
third party application developers, researchers, regulators, and other 
file users will have the expertise to aggregate, standardize, and 
interpret the pricing information included in the file and translate 
the pricing information into products, research, and market oversight 
and reforms that will ultimately benefit consumers.
    The Departments also do not agree that the volume of data would 
make the machine-readable files too large to post publicly, regardless 
of whether the data is posted in two or three files. The Departments' 
rough estimate of file size, based, in part, upon numbers provided by 
commenters, suggests a file size of approximately 5 gigabytes.\204\ CMS 
currently makes available for download on its website some large public 
use file (PUF) data sets that are several gigabytes. For example, the 
Part D Prescriber PUF, \205\ available on the CMS website, is over 
three gigabytes in size. The Departments acknowledge that because of 
the large file size, file users will likely need to use database or 
statistical software to download the machine-readable files as 
importing into Microsoft Excel would result in incomplete loading of 
data. However, this approach is similar to that used for some of the 
larger PUF data sets available on the CMS website, including the Part D 
Prescriber PUF, which must be opened using specialty software.
---------------------------------------------------------------------------

    \204\ As a reference point, a typical commercial two-hour Blu-
ray film is approximately 15-25 gigabytes. ``White Paper Blue-ray 
Disc Format General.'' Blue-ray Disc Association. 2018. Available at 
http://www.blu-raydisc.com/Assets/Downloadablefile/White_Paper_General_5th_20180216.pdf.
    \205\ The Part D Prescriber Public Use File (PUF) is available 
on the CMS website at the following location: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Medicare-Provider-Charge-Data/PartD2017.
---------------------------------------------------------------------------

    Assuming that plans' and issuers' negotiated rates are in a 
digitized format, even if the negotiated rates are not stored in a 
single database, this information can be systematically compiled and 
maintained by the plan or issuer. In recognition that there is no 
single set of billing codes for non-prescription drug services, the 
Departments are providing flexibility in the final rules by not 
prescribing which code or set of codes plans and issuers must use to 
publicly disclose their data. Rather, the Departments are requiring 
that plans and issuers associate each in-network applicable rate or 
out-of-network allowed amount with a CPT, HCPCS code, DRG, or other 
common payer identifier. In the case of prescription drugs, the 
Departments are requiring plans and issuers to associate each 
negotiated rate and historical net price with an NDC. The Departments' 
expectation is that the type of billing code plans and issuers use to 
populate the machine-readable files will be consistent with the billing 
codes that plans and issuers use in their operations when actually 
determining provider reimbursement and cost-sharing liability.
    The Departments further note that nothing prevents plans and 
issuers from including in the files a mixture of billing code types so 
long as the billing codes included in the file are reflective of the 
plan's or issuer's operations. To facilitate identification of the 
billing code type, there will be an indicator in the file format 
described by the technical implementation guidance that will allow 
plans and issuers to specify the particular type of billing code 
entered for each data entry in the machine-readable files. The final 
rules also require that plans and issuers include plain language 
descriptions for each billing code. The Departments note that in the 
case of items and services that are associated with common billing 
codes (such as the HCPCS codes), plans and issuers are permitted to use 
the codes' associated short text description.
    The final rules further clarify that, in the case of NDCs for 
prescription drugs, the plain language description must be the 
proprietary and nonproprietary name assigned to the NDC by the FDA. The 
Departments have made this change to align with the change to require 
only the NDC billing code to be used for prescription drugs. Requiring 
the proprietary and nonproprietary name assigned to the NDC by the FDA 
further standardized the product identifiers for prescription drugs and 
will facilitate comparisons across prescription drug pricing 
information for plans and issuers.
    For all other items and services, as the Departments explicitly 
stated in the proposed rules and elsewhere in this preamble, plans and 
issuers can meet the ``plain language'' description requirements by 
using their chosen code's short text description. However, the 
Departments note that including the short text description for each 
code is a minimum requirement and nothing in the final rules prevents 
plans and issuers from providing a more consumer-friendly plain 
language description for each covered item or service. Plans and 
issuers may be incentivized to provide more consumer-friendly 
information in machine-readable files because it may permit them to 
include disclaimer or clarifying language in the files, where 
applicable. Furthermore, if a plan or issuer uses plain language 
descriptions for billing codes in its operations that are more 
consumer-friendly than the established short text descriptions, the 
Departments expect plans and issuers to include in the machine-readable 
files the plain language descriptions they use in their operations.
    The Departments received comments that supported the Departments' 
development of specific technical standards for the files to which 
plans and issuers must adhere. One commenter recommended the 
Departments provide guidance to plan sponsors who are able to provide 
some, but not all, of the file data elements. Another commenter stated 
that the proposed rules do not make clear how to report items and 
serviced provided through capitated and bundled payment arrangements in 
the files; noting that this information is necessary for consumers to 
measure provider value. One commenter responded positively to the 
Departments' provision of technical implementation guidance for the 
files, but requested a robust public comment solicitation far in 
advance of the applicability date for the rules.
    The Departments are of the view that providing specific technical 
direction in separate technical implementation guidance, rather than in 
the final rules, will better enable the Departments to respond to 
technical issues and developments, as well as compliance questions 
related to novel or rare payment arrangements. Therefore, as proposed, 
the Departments are developing technical implementation guidance for 
plans and issuers to assist them in developing the machine-readable 
files.
    The technical implementation guidance will be available online

[[Page 72242]]

through GitHub, a website and cloud-based service that helps developers 
store and manage their code, as well as to track and control changes to 
their code. The GitHub space offers the Departments the opportunity to 
collaborate with industry, including regulated entities, and third-
party developers to ensure the file format is adapted for reporting of 
the required public disclosure data for various plan and contracting 
models. For example, the Departments have updated the schematics of the 
file formats in response to comments received about and bundled 
payments and capitated payment arrangements, as well as other 
alternative contracting models. Plans and issuers will be able to 
access the GitHub schemas at any time and collaborate with the 
Departments in real-time.
    The Departments' goal in using GitHub is to facilitate this 
collaborative effort all allow plans and issuers to meet the public 
disclosure requirements of the final rules while addressing their 
unique IT system, issuer, and plan attributes. To the extent a plan or 
issuer's unique attributes (for example, IT system, plan benefit 
design, or reimbursement model) are not addressed sufficiently through 
the technical implementation guidance, the Departments intend to 
provide targeted technical assistance to ensure all plans and issuers 
are able to meet the public disclosure requirements under the final 
rules. The technical implementation guidance will provide instructions 
on how to obtain this technical assistance should the need arise.
    The technical implementation guidance hosted on GitHub will include 
a repository set of schemas describing the data formats (encoded as 
JSON, XML, and CSV) for all three machine-readable files: The In-
network Rate File, the Allowed Amount File, and the Prescription Drug 
File. The technical implementation guidance will be available as part 
of the PRA package developed for the ICRs included in the final rules. 
As part of the PRA process, stakeholders have an additional opportunity 
to submit comments related to the PRA for 30 days following the 
publication of the final rules.
    In the proposed rules, the Departments requested comment on whether 
the final rules should adopt a single non-proprietary format for the 
machine-readable files, specifically JSON files. The Departments 
understand that this format generally is easily downloadable, and it 
could simplify the ability of file users to access the data.
    The Departments received one comment in support of requiring JSON 
as the standardized file format for the required machine-readable 
files. However, the Departments' internal technical experts agreed that 
the speed of technology developments weighs heavily in favor of 
maintaining flexibility to adopt a suitable file format as a non-
substantive, operational requirement that will be identified in the 
relevant implementation guidance for the required machine-readable 
files. Additionally, this flexibility will allow the Departments to 
adapt the file technical specifications for new and emerging 
technologies. Therefore, the Departments decline to require in 
regulation a more specific file format for the machine-readable files.
    The Departments reiterate that, as finalized, all machine-readable 
files must conform to a non-proprietary, open-standards format that is 
platform-independent and made available to the public without 
restrictions that would impede the re-use of the information. 
Therefore, because a PDF file format is proprietary, it would not be an 
acceptable file format in which to produce the files. A plan or 
issuer's file will be acceptable so long as it includes all required 
data elements required for the respective file (that is, all applicable 
rates in the In-network Rate File, allowed amounts and billed charges 
in the Allowed Amounts File, and negotiated rates and historical net 
process in the Prescription Drug File) and is formatted in a manner 
consistent with the technical implementation guidance the Departments 
are developing.
    The final rules therefore adopt, with modification, the required 
method and format for disclosure of information through the machine-
readable files. The Departments note several non-substantive 
modifications to the regulatory text, which are being adopted in the 
final rules to clarify and streamline the text. To further highlight 
the file technical implementation guidance, the regulation text of the 
final rules has been modified non-substantively to specify that the 
machine-readable files must be made available in a form and manner 
specified in guidance issued by the Departments. In the proposed rules, 
the regulation text stated more broadly that the machine-readable files 
must be made available in a form and manner determined by the 
Departments. Additionally, the proposed rule included two sentences 
that simply restated what must be publicly disclosed through the two 
proposed machine-readable files.\206\ The Departments have removed 
these sentences from this this section of the regulatory text because 
they duplicate language contained in the previous sections of the 
regulatory text, do not add any additional value to this section of the 
regulatory text, and could cause confusion.
---------------------------------------------------------------------------

    \206\ See 84 FR 65464, 65519 (Nov. 27, 2019).
---------------------------------------------------------------------------

3. Required Accessibility Standards for Disclosure of Information to 
the Public
    The Departments proposed to require a plan or issuer to make 
available on an internet website the required machine-readable files, 
and that the files must be accessible free of charge, without having to 
establish a user account, password, or other credentials, and without 
having to submit any personal identifying information such as a name, 
email address, or telephone number. The Departments also proposed to 
allow plans and issuers flexibility to publish the files in the 
locations of their choosing based upon their superior knowledge of 
their website traffic and the places on their website where the 
machine-readable files would be readily accessible by the intended 
users. The Departments are finalizing these requirements as proposed. 
The Departments also considered requiring plans and issuers to submit 
the internet addresses for the machine-readable files to CMS, and 
having CMS make the information available to the public. A central 
location could allow the public to access the information in one 
centralized location, reducing confusion and increasing accessibility. 
However, the Departments opted to propose flexible rules allowing plans 
and issuers to publish the files in the locations they have chosen 
based upon their determinations regarding where the files will be most 
easily accessible by the intended users. The Departments also 
considered that requiring plans and issuers to notify CMS of the 
internet address for their machine-readable files would increase the 
burdens on plans and issuers. The Departments requested comment on 
whether the proposed requirement to allow issuers to display the files 
in the location of their choice is superior to requiring plans and 
issuers to report the internet-based addresses of their files to CMS 
for public display. The Departments were specifically interested in 
whether the burden associated with reporting file locations to CMS 
would be outweighed by the risk that members of the public would be 
unable to easily locate plans' and issuers' machine-readable files.
    Several commenters supported the Departments' proposal to make the 
machine-readable files easily and publicly available. One commenter

[[Page 72243]]

supported making the files available free of charge and stated that 
individuals should not be required to register a user account, 
password, or enter other credentials, or to submit PII to access the 
files. Several commenters suggested alternative methods or more 
stringent requirements for making public the information required to be 
disclosed through the machine-readable files. One commenter expressed a 
preference for CMS to maintain a centralized location on the CMS 
website from which the public can access links to the files. The 
commenter noted that if the Departments elected not to maintain a 
centralized database, the Departments should require plans and issuers 
to prominently display a link to the files in the main menu of the 
homepage on their respective websites. Similarly, another commenter 
asserted that the final rules should require issuers to report the 
location of their files and provide a data dictionary to facilitate 
oversight and enforcement of plans and issuers.
    Other commenters suggested the Departments create a centralized 
database to house the data required to be disclosed through the 
machine-readable files. One commenter recommended the information 
required to be disclosed through the files be loaded into a publicly 
available searchable database that anyone can access prior to receiving 
a medical service. Similarly, another commenter recommended that HHS 
aggregate the data to create a centralized database. By contrast, 
another commenter recommended the Departments should not create a 
central location for negotiated rate information and historical data, 
making the argument that the private sector is best suited to deliver 
this information to consumers.
    As proposed, the machine-readable files must be made publicly 
available and accessible to any person free of charge and without 
conditions, such as establishment of a user account, password, or other 
credentials, or submission of PII to access the file. Additionally, the 
proposed rules specified that the files must be made available in the 
form and manner specified by the Departments. While the Departments 
considered comments related to the manner of the public file 
disclosures (such as prominent display on a plan or issuer's homepage), 
the Departments are also mindful of the need to provide flexibility to 
plans and issuers so that they are able to house the files in a 
location that meets their unique technical specifications. At this 
time, the Departments are of the view that reporting of the links to 
the file locations is not necessary to achieve the goals of the final 
rules. However, the Departments note that nothing in the final rules 
prevents a Federal or state regulatory body, such as a state Department 
of Insurance (DOI), from collecting this information from issuers 
subject to their jurisdiction.
    The Departments are aware and understand commenters' interest in 
HHS aggregating and centralizing all of the data required to be 
publicly disclosed through the machine-readable files. However, the 
Departments are of the view that HHS is not best suited for this role. 
As noted throughout this preamble, the Departments expect making 
negotiated rate and allowed amount information available through the 
machine-readable files will spur third-party internet-based developers 
to innovate, resulting in consumer-facing tools. The Departments 
anticipate that these consumer-facing tools developed by third parties 
could act as centralized databases, aggregating the pricing information 
for many plans and issuers. The Departments are of the view that the 
private sector is better suited to developing internet-based tools 
using this information than the Departments, and further, that the 
competition spurred by several different third parties operating in 
this space could benefit consumers seeking to find the third-party tool 
that is best suited to their individual consumer needs.
    The final rules adopt, as proposed, the accessibility requirements 
for the machine-readable files. The final rules clarify that the 
accessibility requirements apply to all three machine-readable files 
finalized within the final rules: The In-network Rate File (referred to 
in the proposed rules as the Negotiated Rate File), the Allowed Amount 
File, and the Prescription Drug File.
4. Required Timing of Updates of Information To Be Disclosed to the 
Public
    The proposed rules would have required group health plans and 
health insurance issuers to update the information required to be 
included in each machine-readable file monthly. The Departments also 
proposed to require plans and issuers to clearly indicate the date of 
the last update made to the In-network Rate Files and Allowed Amount 
Files in accordance with guidance issued by the Departments.
    The Departments recognized in the proposed rules that information 
in In-network Rate Files (referred to in the proposed rules as the 
Negotiated Rate Files) could change frequently and considered whether 
to require plans and issuers to update their In-network Rate Files more 
often than monthly to ensure that consumers have access to the most up-
to-date negotiated rate information. Accordingly, the Departments 
sought comment on whether the final rules should require plans' and 
issuers' In-network Rate Files to be updated more frequently. The 
Departments also sought comment on an alternate proposal that would 
require plans and issuers to update negotiated rate information within 
10 calendar days after the effective date of new rates with any in-
network provider, and on whether the update timelines for negotiated 
rate information and historical out-of-network payment data should be 
the same.
    For the reasons discussed elsewhere in this section of this 
preamble, the final rules adopt, as proposed, the requirement for a 
plan or issuer to update the information required to be included in 
each machine-readable file monthly. The final rules clarify that this 
requirement to update the machine-readable files monthly applies to all 
three machine-readable files being finalized through the final rules: 
The In-network Rate File, the Allowed Amount File, and the Prescription 
Drug File.
    Several commenters stated that the requirement to update the In-
network Rate Files and Allowed Amount Files monthly is operationally 
burdensome and the benefits of this requirement are limited because the 
information will not change significantly on a monthly basis. Some 
commenters recommended the Departments change the required frequency of 
updates to every six months, while others suggested that the final 
rules require updates to the In-network Rate File less frequently than 
monthly (for example, quarterly or semi-annually), but recommended that 
the Allowed Amount File should be updated monthly. Another commenter 
recommended a phased-in approach where the files would be updated twice 
a year in the first year of implementation and quarterly thereafter. In 
contrast, one commenter recommended the files be updated in real-time 
as soon as updates to rates are made.
    Based on consultation with government-affiliated IT experts and the 
design of the file schemas, the Departments are of the view that 
building the first machine-readable file will facilitate the automation 
of the process to build future files. In other words, the ability to 
produce subsequent files should be streamlined after completing initial 
development. Therefore, the Departments do not find

[[Page 72244]]

persuasive the contention that requiring file updates monthly will 
significantly increase the overall costs and burdens related to 
producing the files. The Departments, however, do not agree that the 
files should be updated in real-time as soon as updates are made. With 
the monthly update requirement, the Departments are seeking to balance 
the need to ensure the data is current and accurate for consumers with 
minimizing burdens on plans and issuers.
    As noted in the proposed rules, the Departments acknowledge there 
will be some costs with making updates to the files, including costs to 
ensure the quality of data and costs associated with posting the 
information on a public website. The Departments are of the view that 
requiring plans and issuers to update the files on a monthly basis will 
sufficiently limit the burden while ensuring that the most current data 
generally available. However, requiring updates to the files more or 
less frequently would not adequately balance these interests. Requiring 
updates to the files more frequently (such as on a daily basis), would 
add potentially unnecessary burdens for plans and issuers. Requiring 
updates to the files less frequently would potentially result in 
consumers relying on outdated information for health care purchasing 
decisions. While negotiated rates, in particular, may not change 
frequently for any one contract with a provider or group of providers, 
the Departments understand that payer-provider contracts are updated on 
a rolling basis and throughout the year. Therefore, updates throughout 
the year are needed in order to ensure that the information disclosed 
remains up-to-date.
    The final rules also require that the Prescription Drug File be 
updated on a monthly basis. The Departments understand the complexities 
of prescription drug pricing and are aware that drug prices can 
fluctuate as frequently as daily. However, the Departments have 
determined that aligning the frequency of updates of all machine-
readable files will mitigate the burden associated with maintaining the 
files for plans and issuers, and will best balance the need for 
disclosing current and accurate information against that burden. The 
Departments are aware that the number of pricing updates in the monthly 
Prescription Drug File will likely be more than the number of monthly 
pricing updates for medical services in the In-network Rate File. 
However, the Departments are of the view that if plans and issuers can 
update their pharmacy claims processing systems in real-time to account 
for fluctuating prices and adjudicate claims for prescription drugs, 
then the burden to pull current pricing information into the 
Prescription Drug File should be manageable.
    The Departments will monitor the implementation of the machine-
readable file requirements and consider updates in future rulemaking if 
it is determined that monthly updates are not adequately balancing the 
need for accurate and current information against the burdens for plans 
and issuers.
5. Special Rules To Prevent Unnecessary Duplication and Allow for 
Aggregation
    Similar to the proposed cost-sharing information disclosure 
requirements for participants, beneficiaries, and enrollees, the 
Departments proposed a special rule to streamline the publication of 
data that would be included in the proposed machine-readable files. 
This special rule has three components: One for insured group health 
plans where a health insurance issuer offering coverage in connection 
with the plan has agreed to provide the required information, another 
for plans and issuers that contract with third parties to provide the 
information on their behalf, and a special rule allowing aggregation of 
out-of-network allowed amount data.
a. Insured Group Health Plans
    The Departments proposed that, to the extent coverage under a group 
health plan consists of group health insurance coverage, the plan would 
satisfy the proposed machine-readable file requirements if the issuer 
offering the coverage were required to provide the information pursuant 
to a written agreement between the plan and issuer. Accordingly, if a 
plan sponsor and an issuer enter into a written agreement under which 
the issuer agrees to provide the information required under the 
proposed rules, and the issuer fails to provide full or timely 
information, then the issuer, but not the plan, has violated the final 
rule's disclosure requirements. This special rule would only apply, 
however, to insured group health arrangements where the contractually-
obligated issuer is independently subject to the final rules.
    The Departments received comments expressing strong support of the 
special rule to streamline public disclosure and avoid unnecessary 
duplication of disclosures for insured group health insurance coverage. 
These commenters recommended the policy be retained in the final rules. 
Accordingly, the final rules retain this special rule as proposed.
b. Use of Third Parties To Satisfy Public Disclosure Requirements
    The Departments recognize that self-insured group health plans may 
rely on written agreements with other parties, such as service 
providers, to obtain the necessary data to comply with the final rules' 
disclosure requirements. Furthermore, it is the Departments' 
understanding that most health care coverage claims in the U.S. are 
processed through health care clearinghouses and that these entities 
maintain and standardize health care information, including information 
regarding negotiated rates and out-of-network allowed amounts.\207\ As 
a result, the Departments noted in the proposed rules that a plan or 
issuer may reduce the burden associated with making negotiated rates 
and out-of-network allowed amounts available in machine-readable files 
by entering a business associate agreement and contracting with a 
health care claims clearinghouse or other HIPAA-compliant entity to 
disclose this data on its behalf.\208\ Accordingly, the Departments 
proposed to permit a plan or issuer to satisfy the public disclosure 
requirement of the proposed rules by entering into a written agreement 
under which another party (such as a TPA or health care claims 
clearinghouse) will make public the required information in compliance 
with this section. However, if a plan or issuer chooses to enter into 
such an agreement and the party with which it contracts fails to 
provide full or timely information, the plan or issuer will have 
violated the final rules' disclosure requirements.
---------------------------------------------------------------------------

    \207\ The Departments are adopting the definition of health care 
clearinghouse under 45 CFR 160.103 for purposes of these rules. 
Under that definition, health care clearinghouse means a public or 
private entity that performs one of two functions that involve the 
receiving and processing of health information data from a non-
standard format to a standard format or non-standard data elements 
to standard data elements and vice versa.
    \208\ 45 CFR 164.502(a)(3) and 164.504(e)(2).
---------------------------------------------------------------------------

    Generally, commenters supported the use of clearinghouses or TPAs 
to store all of the information that must be disclosed under the 
proposed rules. One commenter suggested that all HIPAA-compliant third 
parties, not just clearinghouses, be allowed to satisfy the public 
disclosure requirements. Some commenters raised concerns related to 
using clearinghouses noting that the feasibility of using 
clearinghouses is dependent on the clearinghouse receiving all of the 
necessary data from health insurance issuers and providers who possess 
the data. The commenter strongly recommended the final rules require 
entities that possess the data to

[[Page 72245]]

share the information in a timely manner with the relevant 
clearinghouses. The commenter also noted the costs charged by 
clearinghouses associated with data storage and noted that the prices 
must be reasonable and not discriminatory (for example, against smaller 
plans).
    Several commenters recommended the Departments' special rule 
include protection for plan sponsors if they fail to meet the public 
disclosure requirements due to an inability, while acting in good 
faith, to obtain the data from a third-party service provider or when a 
contracted third-party withholds information or fails to submit 
information in a timely manner. One of these commenters also requested 
the Departments establish a policy that liability for failure to comply 
rests with a contracted third party in the event a plan sponsor can 
show that, acting in good faith, it is unable to comply with the 
disclosure requirements due to withholding of information by the third 
party.
    This special rule, as finalized, continues to permit a plan or 
issuer to satisfy the public disclosure requirements of 26 CFR 54.9815-
2715A3(b), 29 CFR 2590.715-2715A3(b), and, 45 CFR 147.212(b) of the 
final rules by entering into a written agreement under which another 
party (such as a TPA or health care claims clearinghouse) will make 
public the required information in compliance with this section. The 
final rules identify TPAs and health care claims clearinghouses as 
examples of the types of parties a plan or issuer may contract with, 
but these are not the only types of entities that may enter into such 
arrangements and the Departments expect that they will comply with any 
applicable privacy protection requirements, including applicable 
privacy protections under HIPAA.
    Plans and issuers are not required to enter into such agreements in 
order to comply with the public disclosure requirements of the final 
rules. As the Departments noted in the preamble to the proposed rules, 
if a plan or issuer chooses to enter into such an agreement it is 
ultimately the responsibility of the plan or issuer to ensure that the 
third party provides the information required by the final rules. As 
noted earlier in this section, the special rule for insured plans is 
only available to plans that contract with an entity that is an issuer 
separately subject to final rules. This requirement ensures that the 
Departments retain a mechanism to enforce the final rules. Accordingly, 
this special rule relating to the use of third parties to satisfy these 
requirements continues to provide that the plan or issuer would violate 
the requirements of the final rules if the third party fails to provide 
full or timely information.
    Another commenter recommended the Departments create a special rule 
or ``safe harbor'' for plans that are unable to disclose negotiated 
rate information due to antitrust laws, which prevent the plan from 
accessing information about its partners' contracts when engaged in a 
partnership alliance agreement. The commenter described a partnership 
alliance as shared partner networks in other geographic areas in order 
to meet the needs of multi-state employer groups.
    As discussed earlier in this preamble, the Departments acknowledge 
that the Sherman Antitrust Act prohibits any contract, combination, or 
conspiracy in restraint of trade or commerce.\209\ Specifically, the 
law prohibits any ``person'' from entering into any such contract, 
trust, or similar arrangement.\210\ Nothing under the proposed or final 
rules creates, compels, or endorses agreements or conspiracies between 
or among persons to form illegal arrangements or trusts in restraint of 
trade or commerce. Antitrust law does not proscribe or limit action by 
the Federal Government, to improve competition and lower costs to 
consumers, even if these actions may involve disclosures that, if made 
by private parties under a collusive agreement, might invite antitrust 
scrutiny.\211\ Because the Departments are of the view that antitrust 
law will not prevent plans and issuers from making the public 
disclosures required under the final rules, there is no need for the 
Departments to create a special rule for plans that are unable to 
disclose negotiated rate information due to antitrust laws.
---------------------------------------------------------------------------

    \209\ 15 U.S.C. 1.
    \210\ Id.
    \211\ For example, see 84 FR 65464, 65464-65 (Nov. 27, 2019).
---------------------------------------------------------------------------

    One commenter expressed a concern that multiemployer plans 
generally do not have access to the rate information needed to provide 
the cost-sharing disclosures required under the proposed rules, yet 
plans could be subject to significant penalties for failure to comply. 
The Departments note that insured multiemployer plans would qualify for 
the special rule for insured plans under which an issuer providing 
coverage for a plan enters into an agreement to provide the required 
information, which is being finalized through the final rules. If a 
multiemployer plan sponsor enters into a written agreement with an 
issuer under which the issuer agrees to provide the information 
required under the final rules, and the issuer fails to provide full or 
timely information, then the issuer, but not the plan, has violated the 
transparency disclosure requirements and may be subject to enforcement 
mechanisms applicable to plans under the PHS Act.\212\ Therefore, 
insured multiemployer plans that contract with an issuer to provide the 
information required under the final rules would not be subject to 
enforcement actions under this mechanism; rather, the issuers with whom 
they have contracted will be subject to enforcement action under the 
final rules for failure to meet the transparency disclosure 
requirements.
---------------------------------------------------------------------------

    \212\ Section 2723 of the PHS Act.
---------------------------------------------------------------------------

    Under the second special rule, multiemployer plans may also 
contract with a TPA or other third party (for example, a clearinghouse) 
to meet the transparency disclosure requirements under the final rules. 
However, this commenter is correct that if a plan or issuer chooses to 
enter into such an agreement, and the party with which it contracts 
fails to provide full or timely information, the plan or issuer would 
violate the transparency disclosure requirements.
    The notion that accountability for compliance rests with a plan or 
issuer when the issuer or plan enlists a contractor or vendor for a 
business function is not inconsistent with other applicable 
regulations.\213\ While claims processing is the main function for 
which an issuer or plan has contracted in this example, other 
responsibilities, such as responding to Federal audits and report 
requirements, may fall within the scope of the duties required by 
contract. The Departments clarify that nothing in the final rules 
prevents an issuer or plan from ensuring contracts with TPAs or other 
third parties include clear terms specifying functions required to meet 
the disclosure requirements of the final rules, as well as establish 
service level agreements and performance metrics to hold the entities 
with whom the issuer or plan decides to contract accountable.
---------------------------------------------------------------------------

    \213\ For example, plans remain liable for violations of claims 
regulations under 26 CFR 54.9815-2719 and 29 CFR 2590.715-2719; and 
QHPs issuers who contract with downstream or delegated entities must 
maintain compliance with all applicable standards under 45 CFR 
156.340(a).
---------------------------------------------------------------------------

    Because multiemployer plans may be able to take advantage of the 
special rules established under the proposed rules, the Departments do 
not view additional special considerations necessary to address the 
ability of such

[[Page 72246]]

plans to comply with the transparency requirements of the final rules.
c. Aggregation for Allowed Amount Files
    In order to further mitigate privacy concerns and to eliminate 
unnecessary duplication, the Departments proposed to permit plans and 
issuers to satisfy the public disclosure requirements of the proposed 
rules by making available out-of-network allowed amount data that has 
been aggregated to include information from more than one plan or 
policy. As previously discussed, a plan or issuer may satisfy the 
disclosure requirement by disclosing out-of-network allowed amounts. 
Accordingly, under such circumstances, the proposed rules would have 
permitted plans and issuers to aggregate out-of-network allowed amounts 
for more than one plan or insurance policy or contract.
    To the extent a plan or issuer provided aggregated out-of-network 
allowed amount information, the Departments proposed to apply the 
minimum claims threshold to the aggregated claims data set, but not at 
the plan or issuer level. Based on commenters' requests for 
clarification, the Departments have determined that the proposed 
approach to apply the minimum claims threshold to the full aggregated 
claims data set could undermine the goal of the minimum claims 
threshold. The out-of-network Allowed Amount File must include a unique 
plan identifier for each plan or coverage included in the file under 26 
CFR 54.9815-2715A3(b)(1)(ii)(A), 29 CFR 2590.715-2715A3(b)(1)(ii)(A), 
and 42 CFR 147.212(b)(1)(ii)(A). Therefore, even if the data for each 
plan or coverage were to be aggregated for purposes of determining 
whether the minimum claims threshold applies to a particular covered 
item or service, the data in the Allowed Amounts File would be 
distinguishable at the level of the plan identifier. The Departments 
are of the view that this could be problematic if all plans or coverage 
included in an aggregated Allowed Amount File meet the minimum claim 
threshold for an item or service when combined, but some or all 
individual plans do not independently meet the minimum claim threshold 
of 20 claims.
    For instance, data for two plans are aggregated in the same Allowed 
Amount File under this rule. Plan A has 20 claims for Service X, while 
Plan B only has six claims for Service X. In aggregate, the plans meet 
the 20-claim threshold with 26 total claims for Service X. However, 
individually, only Plan A has met the minimum claim threshold. Under 
the proposal, data for Service X would be required to be included for 
both Plan A and Plan B, along with both the plan identifiers. The 
outcome of this requirement would be that Plan B would include data 
identifiable at the plan level for Service X. The Departments are of 
the view that allowing Plan B data to be included in the file for 
Service X would undermine the minimum claim threshold, increasing risk 
that individual patients' claims histories could be identified. To 
prevent this outcome, data for each plan or coverage included in an 
aggregated Allowed Amount File must independently meet the minimum 
claims threshold for each item or service and for each plan or coverage 
included in the aggregated Allowed Amount File. To highlight this 
requirement, the Departments are finalizing this provision of the 
proposed rules with a minor modification clarifying that the 
flexibility to aggregate out-of-network allowed amounts for more than 
one plan or coverage in a single machine-readable file is still subject 
to the minimum claims threshold applicable to individual plans or 
coverage as described under paragraph (b)(1)(ii)(C) of the same 
section.
    One commenter requested clarification of a plan's obligation if a 
third party aggregates the Allowed Amount File. The commenter 
specifically requested clarification regarding whether the plan or 
third party would be responsible for posting the file, and whether 
there will be any special labeling requirements for an aggregated file, 
including if the file will need to include a disclosure that it 
includes aggregated data.
    Nothing in the final rules prevents the Allowed Amount File from 
being hosted on a third-party website or prevents a plan administrator 
from contracting with a third party to post the file. The Departments 
have added text to the final rules to make clear that this flexibility 
exists and to provide that if a plan chooses not to also host the file 
separately on its own public website, it must provide a link on its 
website to the location where the file is publicly available. The 
Departments will provide additional information on the form and manner, 
including labeling, through the file technical implementation guidance.

III. Overview of the Final Rule Regarding Issuer Use of Premium Revenue 
Under the Medical Loss Ratio Program: Reporting and Rebate 
Requirements--The Department of Health and Human Services

    As stated in the preamble to the proposed rules, consumers with 
health insurance often lack incentives to seek care from lower-cost 
providers, for example when consumers' out-of-pocket costs are limited 
to a set copayment amount regardless of the costs incurred by the 
issuer. Innovative benefit designs can be used to increase consumer 
engagement in health care purchasing decisions. HHS proposed to allow 
issuers that empower and incentivize consumers through the introduction 
of new or different plans that include provisions encouraging consumers 
to shop for services from lower-cost, higher-value providers, and that 
share the resulting savings with consumers, to take credit for such 
``shared savings'' payments in their MLR calculations. HHS believes 
this approach preserves the statutorily-required value consumers 
receive for coverage under the MLR program, while encouraging issuers 
to offer new or different plan designs that support competition and 
consumer engagement in health care.

Formula for Calculating an Issuer's Medical Loss Ratio (45 CFR 158.221)

    Section 2718(b) of the PHS Act requires a health insurance issuer 
offering group or individual health insurance coverage (including 
grandfathered health insurance plans) to provide rebates to enrollees 
if the issuer's MLR falls below specified thresholds (generally, 80 
percent in the individual and small group markets and 85 percent in the 
large group market). Section 2718(b) of the PHS Act generally defines 
MLR as the percentage of premium revenue (after certain adjustments) an 
issuer expended on reimbursement for clinical services provided to 
enrollees and on activities that improve health care quality. 
Consistent with section 2718(c) of the PHS Act, the standardized 
methodologies for calculating an issuer's MLR must be designed to take 
into account the special circumstances of smaller plans, different 
types of plans, and newer plans.
    Several states have considered or adopted legislation over the last 
few years to promote health care cost transparency and encourage 
issuers to design and make available plans that ``share'' savings with 
enrollees who shop for health care services and choose to obtain care 
from lower-cost, higher-value providers.\214\ In addition, at least 
five states and a number of self-insured group health plans have 
incorporated such ``shared savings'' provisions into

[[Page 72247]]

all or some of their health plans.\215\ Under some plan designs, the 
savings are calculated as a percentage of the difference between the 
rate charged by the provider chosen by the consumer for a medical 
procedure and the average negotiated rate for that procedure across all 
providers in the issuer's network. Under other plan designs, the 
``shared savings'' are provided as a flat dollar amount according to a 
schedule that places providers in one or more tiers based on the rate 
charged by each provider for a specified medical procedure. Under 
various plan designs, the ``shared savings'' may be provided in form of 
a gift card, a reduction in cost sharing, or a premium credit. HHS is 
of the view that such unique plan designs would motivate consumers to 
make more informed choices by providing consumers with tangible 
incentives to shop for care at the best price. As explained elsewhere 
in the preamble to the proposed rules, there is ample evidence that 
increased transparency in health care costs would lead to increased 
competition among providers.\216\ HHS is of the view that allowing 
flexibility for issuers to include savings they share with enrollees in 
the numerator of the MLR would increase issuers' willingness to 
undertake the investment necessary to develop and administer plan 
features that may have the effect of increasing health care cost 
transparency, which in turn could lead to reduced health care costs.
---------------------------------------------------------------------------

    \214\ 24-A Maine Rev. Stat. Ann. Sec. 4318-A (adopted Jun. 19, 
2017); Neb. Rev. Stat. Sec. 44-1401 et seq. (adopted Apr. 23, 2018); 
Utah Code Ann. Sec. 31A-22-647 (adopted Mar. 19, 2018); AZ SB 1471 
(2018); N.H. HB 1784-FN (2018); MA H2184 (2017).
    \215\ See the State of Kansas' SmartShopper program for state 
employees enrolled with BCBSKS, available at: https://healthbenefitsprogram.ks.gov/docs/default-source/site-documents/sehp/vendor-documents/bcbs/smartshopper_state_of_kansas_steps.pdf?sfvrsn=cfa4e44_8; the state 
of Kentucky employee member handbook for Livingwell CDHP's 
SmartShopper program, available at: https://personnel.ky.gov/KEHP/2020%20LivingWell%20CDHP%20Medical%20Benefit%20Booklet.pdf and 
https://www.smartshopper.com/legacy?utm_expid=.WJ_v45PuTXuo1k6ioPp4tA.1&utm; the State of 
Massachusetts employee member handbook for Fallon Health Select 
Care's SmartShopper program, available at: https://www.mass.gov/doc/fallon-select-care-handbook-fy21/download; the State of New 
Hampshire employee medical benefit, the Site of Service and Vitals 
SmartShopper Programs, available at: https://das.nh.gov/riskmanagement/active/medical-benefits/cost-savings-programs.aspx#vitals-smartshopper; Utah Public Employees Health 
Program Cost Tools, available at: https://www.pehp.org/save.
    \216\ Austin, D. A., and Gravelle, J. G. ``Congressional 
Research Service Report for Congress: Does Price Transparency 
Improve Market Efficiency? Implications of Empirical Evidence in 
Other Markets for the Healthcare Sector.'' Congressional Research 
Service. July 24, 2007.''Available at: https://fas.org/sgp/crs/secrecy/RL34101.pdf.
---------------------------------------------------------------------------

    HHS has in the past exercised its authority under section 2718(c) 
of the PHS Act to take into account the special circumstances of 
different types of plans by providing adjustments to increase the MLR 
numerator for ``mini-med'' and ``expatriate'' plans,\217\ student 
health insurance plans,\218\ as well as for QHPs that incurred Exchange 
implementation costs \219\ and certain non-grandfathered plans (that 
is, ``grandmothered'' plans).\220\ This authority has also been 
exercised to recognize the special circumstances of new plans \221\ and 
smaller plans.\222\ Consistent with this approach, HHS proposed to 
exercise its authority to account for the special circumstances of new 
and different types of plans that provide ``shared savings'' to 
consumers who choose lower-cost, higher-value providers by adding a new 
paragraph 45 CFR 158.221(b)(9) to allow such ``shared savings'' 
payments to be included in the MLR numerator. HHS made this proposal so 
that issuers would not be required to pay MLR rebates based on a plan 
design that would provide a benefit to consumers that is not currently 
captured in any existing MLR revenue or expense category. HHS proposed 
that the amendment to 45 CFR 158.221 would become effective beginning 
with the 2020 MLR reporting year (for reports filed by July 31, 2021). 
HHS invited comments on this proposal.
---------------------------------------------------------------------------

    \217\ See 45 CFR 158.221(b)(3) for ``mini-med'' plans and 45 CFR 
158.221(b)(4) for ``expatriate'' plans; see also the Health 
Insurance Issuers Implementing Medical Loss Ratio (MLR) Requirements 
Under the Patient Protections and Affordable Care Act; Interim Final 
Rule; 75 FR 74864, 74872 (Dec. 1, 2010).
    \218\ See 45 CFR 158.221(b)(5); see also the Student Health 
Insurance Coverage; Final Rule, 77 FR 16453, 16458-16459 (Mar. 21, 
2012).
    \219\ See 45 CFR 158.221(b)(7); see also the Exchange and 
Insurance Market Standards for 2015 and Beyond; Final Rule; 79 FR 
30240, 30320 (May 27, 2014).
    \220\ See 45 CFR 158.221(b)(6); see also 79 FR 30240, 30320 (May 
27, 2014). See 45 CFR 158.221(b)(6); see also 79 FR 30240, 30320 
(May 27, 2014); see also 45 CFR 158.221(b)(6); see also 79 FR 30240, 
30320 (May 27, 2014). ``Grandmothered'' plans is a term for certain 
non-grandfathered coverage in the small group and individual health 
insurance markets. Since 2014, CMS has permitted, subject to 
applicable State authorities, health insurance issuers to continue 
certain coverage that could not otherwise remain in place without 
significant changes to comply with PPACA. Such health insurance 
coverage would not be treated as out of compliance with sections 
2701-2707 and 2709 of the PHS Act and section 1312(c) of PPACA 
(group health plans must still comply with section 2704 and 270505 
of the PHS Act). See Extended Non-Enforcement of Affordable Care 
Act-Compliance With Respect to Certain Policies, available at 
https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Limited-Non-Enforcement-Policy-Extension-Through-CY2020.pdf and https://www.cms.gov/files/document/extension-limited-non-enforcement-policy-through-calendar-year-2021.pdf.
    \221\ See 45 CFR 158.121; see also 75 FR 74864, 74872-74873 
(Dec. 01, 2010) and the HHS Notice of Benefit and Payment Parameters 
for 2018 Final Rule; 81 FR 94058, 94153-94154 (Dec. 22, 2016).
    \222\ See 45 CFR 158.230 and 158.232; see also 75 FR 74864, 
74880 (Dec. 01, 2010).
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    After considering the public comments, HHS is finalizing the 
amendment to 45 CFR 158.221(b) as proposed.
    The majority of comments on the proposed amendments to the MLR 
program rules supported the proposal to add a new paragraph to 45 CFR 
158.221(b). Supporters noted that allowing issuers to include ``shared 
savings'' payments in their MLR calculation aligns issuer and enrollee 
incentives, aligns with MLR's purposes, is innovative, provides 
enrollees with value, increases consumer engagement and empowerment, 
and will promote better enrollee decision-making and reduce total 
health care costs. Several supportive commenters also noted that the 
proposal may encourage more issuers to offer such ``shared savings'' 
programs, as allowing ``shared savings'' payments to be included in the 
MLR numerator will remove any existing barriers to such programs and 
facilitate the use of innovative benefit designs that increase consumer 
engagement in health care purchasing decisions, while disallowing this 
approach punishes issuers that offer innovative ``shared savings'' 
programs and disincentivizes issuers from adopting such programs. 
Several commenters stated that there is evidence that patients are more 
likely to shop for care when information on prices is coupled with 
incentives, and that such shopping can generate significant savings for 
issuers and lead health care providers to lower their prices in order 
to remain competitive in the marketplace.\223\
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    \223\ For example, one commenter shared that since 2015, its 
``shared savings'' program issued over 149,000 incentive reward 
payments, generating over $85 million in savings. See https://beta.regulations.gov/document/CMS-2019-0163-14320.
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    HHS agrees with the comments in support of the proposal and is 
finalizing this amendment as proposed to provide additional flexibility 
to states and issuers and encourage the economic effects the commenters 
highlighted.
    Some commenters requested clarification regarding certain aspects 
of the ``shared savings'' plans. Several commenters requested that HHS 
develop uniform standards and a definition for ``shared savings,'' 
which according to commenters would, among other things, help prevent 
fraud and abuse; and that HHS clarify the criteria for low-cost, high-
value providers. One commenter asked HHS to provide sub-regulatory 
guidance to specify in what form the savings can be shared, how issuers 
will report their ``shared

[[Page 72248]]

savings,'' how double-counting can be prevented, and whether ``shared 
savings'' payments are taxable income. Other commenters suggested that 
HHS provide maximum flexibility for issuers and states to innovate and 
develop ``shared savings'' programs they determine are best suited for 
their populations.
    While HHS appreciates these suggestions and is also concerned with 
preventing fraud and abuse, HHS is of the view that state legislators 
and regulators are currently in a better position than HHS to work with 
the issuers in their states to define the ``shared savings'' programs 
that they support, issue standards and criteria for the programs for 
their respective constituents, and decide in what form the savings can 
be made. These considerations include the operational details of any 
``shared savings'' program, such as creating standards and definitions, 
developing acceptable payment methods, and addressing fraud concerns. 
HHS notes that several issuers have already developed and implemented 
such programs and that a few states have done the same. The amendment 
being finalized in this rulemaking is specific to the recognition of 
``shared savings'' payments in issuer MLR calculations and is intended 
to encourage more state and issuer innovation with these types of 
programs. Accordingly, HHS will provide technical guidance in the MLR 
Annual Reporting Form Instructions to clarify the reporting of ``shared 
savings'' payments specifically for MLR purposes. With respect to the 
comment regarding how double-counting can be prevented, HHS notes that 
45 CFR 158.170 prevents double-counting by requiring each expense to be 
reported in only one category or to be pro-rated between categories for 
MLR purposes. Finally, whether ``shared savings'' payments to enrollees 
are taxable will vary based on certain specific facts and 
circumstances. Some forms of ``shared savings'' may be taxable; 
however, HHS defers to the Department of the Treasury to address the 
taxability of such payments as necessary.
    Opponents of the proposal stated that it fails to ensure that the 
savings are actually used for health care or quality improvement 
activities (QIA), that HHS is subverting the statutory scheme by 
allowing issuers to spend less on enrollees' care and quality 
initiatives without returning the premium dollars saved to all 
enrollees, and that the proposal would allow issuers to further boost 
profits and diminish the MLR standards and issuer accountability. Some 
opponents of the proposal argued that since any plan type can offer 
``shared savings,'' adding a ``shared savings'' payment component to a 
policy does not make it a ``different'' type of plan and it should not 
be treated as such. Others were concerned that the proposal would 
incentivize issuers to artificially drive down negotiated rates with 
providers and that these savings may not make their way back to 
enrollees. One commenter opposed extending ``shared savings'' programs 
to self-insured ERISA plans. Another commenter pointed out that the 
National Association of Insurance Commissioners (NAIC) did not mention 
the proposal in its comments and the MLR statute provides that the NAIC 
shall establish the definitions and methodologies for MLRs.
    HHS agrees that ``shared savings'' are neither an incurred claim 
nor a QIA. Instead, in support of this amendment to 45 CFR 158.221(b), 
HHS is relying on the statutory directive under section 2718(c) of the 
PHS Act that the MLR standardized methodologies shall be designed to 
take into account the special circumstances of different types of plans 
and newer plans, such as plans that offer ``shared savings'' payments 
to enrollees that seek care from lower-cost, higher-value providers. 
HHS believes that any issuer that includes in its plan design(s) a 
``shared savings'' component is offering a ``different'' type of plan 
and a ``newer'' plan, as a ``shared savings'' program is a new and 
unique feature. HHS notes that the amendment finalized in these rules 
helps provide policyholders with value for their premium dollars, as 
intended by section 2718 of the PHS Act. HHS disagrees that the 
amendment somehow subverts the statutory scheme as issuers that 
implement these programs are sharing the savings and returning dollars 
to enrollees who participate in these programs, and issuers must still 
otherwise meet the applicable MLR threshold or provide a rebate to 
enrollees. For the same reasons, HHS does not share certain commenters' 
view that the amendment weakens the MLR standards and enables issuers 
to improperly boost profits, as the amendment simply allows issuers to 
account for the portion of the ``shared savings'' that is passed to 
participating enrollees and that consequently does not increase 
issuers' profits. With respect to comments regarding the impact on 
provider negotiated rates and enrollee access to savings, HHS is unsure 
how the amendment would incentivize issuers to artificially drive down 
negotiated rates with providers. However, if as a result of this 
amendment, provider rates decrease, such a result would in fact benefit 
enrollees. In addition, because only actual payments made to enrollees 
can be included in an issuer's MLR calculation under the amendment, 
issuers will benefit for MLR calculation and reporting purposes only if 
the savings are actually shared with enrollees. With respect to the 
comment regarding self-insured ERISA plans, HHS notes that this 
amendment does not apply to or impact, either self-funded ERISA plans, 
or self-funded non-ERISA plans, as these plans are not subject to the 
MLR reporting and rebate requirements under section 2718 of the PHS 
Act. Last, with respect to comments regarding the NAIC recommendations 
to HHS, section 2718(c) of the PHS Act directed the NAIC, subject to 
certification by the Secretary, to establish uniform definitions and 
standardized methodologies to guide MLR reporting and calculations. The 
NAIC met its statutory obligation when it provided recommendations to 
HHS in 2010 in the form of a model regulation.\224\ The NAIC's 
recommendations informed the Secretary's decisions about the Federal 
definitions and methodologies for calculating MLRs.\225\ In this 
rulemaking, HHS is taking further action to recognize the special 
circumstances of the different and newer plans that include ``shared 
savings'' programs with the addition of new paragraph (b)(9) to 45 CFR 
158.221.
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    \224\ ``Regulation for Uniform Definitions and Standardized 
Methodologies for Calculation of the Medical Loss Ratio for Plan 
Years 2011, 2012, and 2013 per section 2718(b) of the Public Health 
Service Act,'' MDL-190. Available at: https://www.naic.org/store/free/MDL-190.pdf?4.
    \225\ See the Health Insurance Issuers Implementing Medical Loss 
Ratio (MLR) Requirements Under the Patient Protection and Affordable 
Care Act; Interim Final Rule, 75 FR 74864 (Dec. 1, 2010); see also 
45 CFR part 158.
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    Some commenters expressed concerns that ``shared savings'' programs 
in general could actually compromise the quality of care by driving 
consumer choices based on cost without regard for quality, and that 
these programs could encumber and curtail medically necessary clinical 
services in serving the financial interest of the payer. Some 
commenters requested that HHS only allow ``shared savings'' where there 
is evidence that the participating enrollees actually receive better 
care at reduced costs. One commenter stated that the proposal fails to 
define higher-value, which varies based on each enrollee's 
circumstances. One commenter questioned the feasibility of measuring 
whether reward systems generate actual savings.

[[Page 72249]]

    HHS disagrees that programs that reward enrollees for critically 
examining their options and pursuing cost-effective care interfere with 
the provision of medically necessary clinical services. However, HHS 
agrees that quality as well as cost should be determinants of what 
qualifies for inclusion in any given issuer's ``shared savings'' 
program. That is why the amendment to 45 CFR 158.221 includes both a 
cost and quality component; it permits issuers to include in the MLR 
numerator ``shared savings'' payment made to enrollees choosing to 
obtain care from a lower-cost and higher-value provider. However, HHS 
did not propose and is not finalizing elements or criteria issuers must 
address or otherwise include in their respective ``shared savings'' 
programs. The amendment finalized in this rulemaking is specific to 
recognizing ``shared savings'' payments in issuer MLR calculations. As 
detailed above, HHS believes state legislators and regulators are 
currently in the best position to work with issuers in their states to 
develop standards and criteria for ``shared savings'' programs for 
their respective constituents. HHS further believes that issuers are in 
the best position to perform the necessary provider credentialing 
activities that will ensure that network providers that are included in 
their ``shared savings'' programs are high-value, high-quality 
providers. Since higher-value can vary by enrollee demographics and 
provider type, issuers must determine what this means for their 
enrollees and providers and maintain all documents and other evidence 
necessary to support that determination consistent with the maintenance 
of records requirements contained in 45 CFR 158.502. Issuers are 
sophisticated entities that understand that if their enrollees obtain 
lower-quality care, their costs over the long-term will increase rather 
than decrease as their enrollees will likely need additional and 
possibly corrective medical care. HHS therefore believes that issuers' 
incentives are aligned with those of their enrollees when it comes to 
designing ``shared savings'' programs.
    HHS received a few comments urging that issuers be allowed to 
include some or all of the costs of implementing the requirements of 
these price transparency rules as a QIA in the numerator of the MLR 
calculation. A few commenters urged HHS to allow issuers to include 
some or all of the costs of creating the cost estimator tool required 
by the price transparency aspects of the proposed rules.
    Price transparency implementation costs do not constitute an 
improvement to the quality of health care and thus do not qualify as 
QIA and cannot be included in the numerator of the MLR calculation.
    Lastly, several commenters expressed support for or opposition to 
the MLR reporting and rebate requirements in general. HHS appreciates 
these comments but notes that they are outside the scope of the 
amendments to the MLR program rules contained in the proposed rule.

IV. Applicability

A. In General

1. Entities Subject to the Final Rules
    The Departments proposed requiring group health plans, including 
self-insured plans, and health insurance issuers of individual and 
group health insurance coverage to disclose pricing information, with 
certain exceptions as discussed in more detail in this preamble. The 
Departments are of the view that consumers across the private health 
insurance market will benefit from the availability of pricing 
information that is sufficient to support informed health care 
decisions. Although the Departments considered making the requirements 
applicable to a more limited segment of the private health insurance 
market, the Departments are of the view that consumers across the 
market should receive and benefit from the same access to standardized, 
meaningful pricing information and estimates. Moreover, applied 
broadly, these changes have a greater potential to reform health care 
markets.
    Additionally, the preamble to the proposed rules discussed how 
pricing information related to items and services that are subject to 
capitation arrangements under a specific plan or contract could meet 
transparency standards by disclosing only the consumer's anticipated 
liability. The Departments sought comment on whether there are certain 
reimbursement or payment models (such as ACOs or staff model HMOs) that 
should be partially or fully exempt from these requirements or should 
otherwise be treated differently. Further, the Departments sought 
comment on how consumers may become better informed about their cost-
sharing requirements under these reimbursement or payment models.
    The Departments also considered limiting applicability to issuers 
of individual health insurance coverage and insured group health 
insurance coverage, but concluded that limiting applicability would be 
inconsistent with section 2715A of the PHS Act. The Departments are 
concerned that a more limited approach might encourage plans and 
issuers to simply shift costs to sectors of the market where the final 
rules would not apply and where consumers have diminished access to 
pricing information. Additionally, the Departments are concerned that a 
more limited approach may distort the health care market by creating 
perverse incentives for plans and issuers to avoid participating in 
certain markets that require compliance with these requirements.
    The Departments are aware that certain plans and health coverage 
are not subject to the transparency provisions under section 2715A of 
the PHS Act and, therefore, are not be subject to the final rules. This 
includes grandfathered health plans, excepted benefits, health care 
sharing ministries, and short-term, limited-duration insurance (STLDI).
    Grandfathered health plans are health plans that were in existence 
as of March 23, 2010, the date of enactment of PPACA, and that are only 
subject to certain provisions of PPACA, as long as they maintain their 
status as grandfathered health plans under the applicable rules.\226\ 
Under section 1251 of PPACA, section 2715A of the PHS Act does not 
apply to grandfathered health plans. Therefore, the proposed rules 
would not have applied to grandfathered health plans (as defined in 26 
CFR 54.9815-1251, 29 CFR 2590.715-1251, and 45 CFR 147.140).
---------------------------------------------------------------------------

    \226\ 26 CFR 54.9815-1251, 29 CFR 2590.715-1251, and 45 CFR 
147.140.
---------------------------------------------------------------------------

    In accordance with sections 2722 and 2763 of the PHS Act, section 
732 of ERISA, and section 9831 of the Code, the requirements of title 
XXVII of the PHS Act, part 7 of ERISA, and chapter 100 of the Code do 
not apply to any group health plan (or group health insurance coverage 
offered in connection with a group health plan) or individual health 
insurance coverage in relation to its provision of excepted benefits. 
Excepted benefits are described in section 2791 of the PHS Act, section 
733 of ERISA, and section 9832 of the Code. Section 2715A of the PHS 
Act is contained in title XXVII of the PHS Act, and, therefore, the 
proposed rules would not have applied to a plan or coverage consisting 
solely of excepted benefits.
    The Departments also proposed that the rules would not apply to 
STLDI. Under section 2791(b)(5) of the PHS Act, STLDI is excluded from 
the definition of individual health insurance coverage and is therefore 
exempt from section 2715A of the PHS

[[Page 72250]]

Act.\227\ Therefore, the proposed rules would not have applied to STLDI 
coverage.
---------------------------------------------------------------------------

    \227\ See 26 CFR 54.9801-2, 29 CFR 2590.701-2, and 45 CFR 
144.103.
---------------------------------------------------------------------------

    The Departments also proposed that the rules would not apply to 
health reimbursement arrangements, or other account-based plans, as 
defined in 26 CFR 54.9815-2711(d)(6)(i), 29 CFR 2590.715-2711(d)(6)(i), 
and 45 CFR[thinsp]147.126(d)(6)(i), that simply make reimbursements 
subject to a maximum fixed dollar amount for a period, with the result 
that cost-sharing concepts are not applicable to those arrangements.
    In contrast, the Departments proposed that the final rules would 
apply to grandmothered plans, meaning certain non-grandfathered health 
insurance coverage in the individual and small group markets with 
respect to which CMS has announced it will not take enforcement action 
even though the coverage is out of compliance with certain specified 
market requirements.\228\ The Departments sought comment on whether 
grandmothered plans may face special challenges in complying with these 
transparency reporting provisions and whether the proposed rules should 
apply to grandmothered plans.
---------------------------------------------------------------------------

    \228\ Pate, R. ``Insurance Standards Bulletin Series.'' Centers 
for Medicare & Medicaid Services. January 31, 2020. Available at: 
https://www.cms.gov/files/document/extension-limited-non-enforcement-policy-through-calendar-year-2021.pdf.
---------------------------------------------------------------------------

    The final rules adopt these provisions as proposed. The final rules 
apply these requirements to group health plans, and health insurance 
issuers offering non-grandfathered group or individual health insurance 
coverage, with certain exceptions. Thus, the final rules apply to 
grandmothered plans. The Departments are finalizing, as proposed, that 
these requirements will not apply to certain plans and coverages that 
are not subject to the transparency provisions under section 2715A of 
the PHS Act, including grandfathered health plans, excepted benefits, 
and STLDI. Additionally, the final rules will not apply to health 
reimbursement arrangements, or other account-based plans, as defined in 
26 CFR 54.9815-2711(d)(6)(i), 29 CFR 2590.715-2711(d)(6)(i), and 45 
CFR[thinsp]147.126(d)(6)(i), as these account-based arrangements simply 
make certain dollar amounts available, with the result that cost-
sharing and price setting concepts are not applicable to those 
arrangements.
    The majority of commenters supported applying these requirements to 
issuers of individual health insurance coverage and group health 
insurance coverage, as well as group health plans. Commenters supported 
allowing consumers across the market to access important pricing 
information. Some commenters suggested additional plans and coverages 
that should be required to comply with these requirements, as discussed 
later in this preamble. The Departments did not receive comments 
regarding application of the final rules to grandmothered plans.
    One commenter stated that the proposed rules would create an uneven 
playing field that would unfairly advantage plans and issuers offering 
stand-alone dental or vision coverage over plans that incorporate such 
benefits into major medical coverage. For example, the commenter stated 
that a plan offering essential health benefits would have to include in 
a machine-readable file negotiated rates for pediatric dental services. 
However, a plan offering stand-alone dental coverage would not have to 
publish pricing information. For these reasons, the commenter 
recommended that vision, dental, and hearing benefits, if offered as 
part of a plan or coverage subject to the transparency requirements, 
should be excluded from information disclosed through the internet-
based self-service tool and machine-readable files.
    In response to this comment, the Departments note that section 
2721(b), (c)(1) through (3) of the PHS Act provides an exemption from 
title XXVII of the PHS Act for ``any individual coverage or any group 
health plan (and group health insurance coverage offered in connection 
with a group health plan) in relation to its provision of excepted 
benefits.'' (See also section 732 (b), (c) of ERISA, and section 
9831(b), (c) of the Code) (emphasis added).\229\ To the extent that a 
plan or issuer provides a participant, beneficiary, or enrollee with 
the opportunity to opt out of limited scope dental or vision benefits, 
those benefits are considered as not an integral part of the plan and, 
accordingly, are considered excepted benefits.\230\ Therefore, under 
the final rules, plans and issuers that offer excepted benefits, such 
as limited scope dental or vision benefits, along with their major 
medical coverage are not required to disclose the information required 
by the final rules regarding their provision of those excepted 
benefits. Accordingly, the final rules do not create an uneven playing 
field that would unfairly advantage plans and issuers offering stand-
alone dental or vision coverage over plans that incorporate such 
benefits into major medical coverage.
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    \229\ See also section 2763 of the PHS Act.
    \230\ 26 CFR 54.9831-1(c)(3)(ii), 29 CFR 2590.732(c)(3)(ii), and 
45 CFR 146.145(b)(3)(ii).
---------------------------------------------------------------------------

    The Departments received a mix of comments regarding whether the 
final rules should apply to alternative contracting and alternative 
payment model structures, such as ACOs or HMOs. One commenter 
recommended a narrower scope for ACOs and other capitated payment 
arrangements, including only requiring transparency tools to display 
amounts that are not service dependent (for example, flat copayments), 
as well as accumulator information about deductibles and out-of-pocket 
maximums. As discussed elsewhere in this preamble, some commenters 
expressed concern regarding how the final rules would apply to 
reference-based pricing models, direct primary care, bundled or 
capitated payment arrangements, and value-based insurance design. 
Additionally, some commenters expressed concern regarding how the final 
rules would apply to plans with rental networks and quality-adjusted 
and risk-adjusted contracts (under which prices can only be calculated 
after the fact). These commenters recommended that these kinds of 
arrangements be exempt from the final rules' requirements.
    On the other hand, other commenters suggested that there is no 
justification for excluding plans that reimburse their providers based 
on capitation from the requirements of the final rules as this would 
result in an incomplete data set, and issuers of risk adjustment-
covered plans already assign values to services to administer benefits 
with deductibles and co-insurance, for risk adjustment purposes under 
45 CFR 153.710(c), and for internal reporting. One commenter 
recommended that the final rules should apply to ACOs and other 
capitated arrangements and that these arrangements should be required 
to disclose their underlying financial incentive arrangements, not just 
consumer's anticipated liability. The commenter also noted that any 
exemptions may incentivize plans to move to these pricing models, which 
the commenter characterized as opaque and potentially consumer-
unfriendly. Several commenters agreed that pricing information related 
to items and services subject to capitation arrangements could meet 
transparency standards only through the disclosure of the consumer's 
anticipated liability.
    Some commenters raised the concern that the proposed rules would 
have a particularly negative impact on smaller entities that are less 
likely to have the financial reserves and technological

[[Page 72251]]

resources to build and maintain systems to operationalize disclosure 
requirements. Some commenters requested that the final rules be 
optional or that smaller plans and TPAs be exempted from the 
requirements. For example, a few commenters recommended providing an 
exception to the price transparency requirement for small issuers, 
TPAs, and plans with revenue below the $41.5 million small entity 
threshold or with 100,000 commercial participants, beneficiaries, and 
enrollees or fewer. They suggested that an exception to the final rules 
would allow small issuers to adopt elements of the requirements of most 
relevance to their participants, beneficiaries, and enrollees while not 
forcing them to create a much more expensive option that may be of 
limited appeal.
    In considering these concerns, the Departments weighed the 
competing goals of ensuring that consumers have access to pricing 
information, the burden on plans, including self-insured plans, and 
issuers of individual health insurance coverage and group health 
insurance coverage, and encouraging innovative plan design. As 
finalized, all issuers of non-grandfathered individual and group health 
insurance coverage and self-insured plans (that are not account-based 
plans), are required to comply with the final rules. Finalizing these 
rules to be applicable to plans as proposed is the most straightforward 
approach as it is impossible to define and predict all possible 
modifications, plans, or models. Furthermore, doing so mitigates 
creating incentives to adopt certain plan designs over others. The 
Departments believe that this is not likely to stifle innovation. 
Rather, the Departments are of the view that this approach creates a 
level playing field for non-grandfathered individual and group health 
insurance coverage and self-insured plans (that are not account-based 
plans) to create innovative plan designs and increase consumers' access 
to pricing information that is sufficient to support informed health 
care decisions. The Departments are of the view that exempting plan 
designs, such as alternative contracting and alternative payment model 
structures, would create an opportunity for plans and issuers to avoid 
sharing important pricing information with consumers. The Departments 
maintain the view that consumers across the market should come to 
expect and receive the same access to standardized, meaningful pricing 
information and estimates for all plans affected by the final rules. In 
addition, as detailed earlier in this preamble, issuers of risk 
adjustment-covered plans that include capitation arrangements are 
required under the final rules to submit a derived amount, potentially 
using the same internal methodology the issuer uses to assign a price 
value to the item or service for purposes of submitting risk adjustment 
data under 45 CFR 153.710(c).
    A few commenters supported exempting grandfathered health plans, 
HRAs or other account-based plans, excepted benefits, and STLDI from 
the proposed rules. However, a majority of commenters were concerned 
that the final rules, as proposed, would not apply to plans or 
arrangements that may have the highest potential cost-sharing 
obligations, such as STLDI and health care sharing ministries. These 
commenters were concerned that STLDI plans often have dollar limits on 
covered benefits, limits on prescription drug coverage and covered 
doctor visits, and excluded benefits, which often means consumers 
enrolled in these plans can face higher cost-sharing liability when 
seeking medical care than patients covered by individual health 
insurance coverage, as defined under section 2791(b)(5) of the PHS Act. 
They stated that it is even more important for these patients to have 
access to their cost-sharing liability under the final rules before 
receiving care or even signing up for a STLDI plan, so they are aware 
of their coverage limits and are prepared to receive bills from the 
hospital and other health care providers for amounts that exceed their 
coverage. One commenter stated that whether such plans are considered 
``individual health insurance'' is not relevant for such a 
determination, as the proposed rules would not apply to just individual 
health insurance, but would also apply to group coverage and 
grandmothered plans.
    The Departments appreciate the concerns raised by commenters 
regarding these plans. However, the final rules adopt these policies as 
proposed. As noted earlier in this section of this preamble, certain 
types of coverage and arrangements such as STLDI, excepted benefits and 
health care sharing ministries, are not subject to the transparency 
provisions under section 2715A of the PHS Act and, therefore, are not 
subject to the final rules. However, the Departments encourage all 
plans that are not subject to the final rules to work to increase the 
transparency and availability of pricing information, to enable 
consumers to make informed health care decisions.
    One commenter sought clarification of the liability of individual 
employers concerning Multiple Employer Welfare Arrangements (MEWAs) and 
Taft-Hartley plans. Section 715 of ERISA incorporates section 2715A of 
the PHS Act into part 7 of ERISA. Generally, employers are only 
responsible for ensuring compliance with the requirements of ERISA for 
a Taft-Hartley plan (also known as a multi-employer plan), if they are 
a member of the association, committee, joint board of trustees, or 
other similar group of representatives of the parties who establish or 
maintain the plan, or are otherwise a fiduciary of the plan. For MEWAs 
that are employee welfare benefit plans, the bona fide group or 
association that sponsors the MEWA assumes and retains responsibility 
for operating and administering the MEWA, including ensuring compliance 
with Part 7 of ERISA. In cases where the MEWA itself is not a plan, 
each employer that provides benefits through a MEWA and, therefore, 
maintains its own plan, is separately responsible for compliance with 
ERISA requirements, and thus with the requirements of the final rules.
    Some commenters recommended adding additional plans and coverages 
to the list of health coverage not subject to these transparency 
requirements. One commenter recommended adding expatriate health plans 
because the Expatriate Health Coverage Clarification Act of 2014 
exempts expatriate health plans from most of the provisions of PPACA, 
including sections 1311(e)(3) of PPACA and section 2715A of the PHS 
Act, both of which the Departments cite in asserting statutory 
authority to propose these transparency requirements. Another commenter 
recommended that Denominational Health Plans be specifically exempted 
from the final rules. This commenter noted that Denominational Health 
Plans can only offer coverage to a limited segment of the population--
eligible employees in the denomination--based on church requirements, 
beliefs, and polity. Therefore, most of the individuals to which this 
information would be disclosed would not be eligible to enroll in these 
plans even if they wished to do so. Other commenters recommended 
extending the final rules to health coverage to which 2715A of the PHS 
Act does not apply. For example, a commenter recommended that the 
Departments add Medicaid Managed Care Organization plans and Medicare-
Medicaid Plans to the list of health plans not subject to the 
transparency requirements. The commenter noted that the combination of 
Medicaid payment rates and low cost-sharing requirements limit the

[[Page 72252]]

usefulness of this information in the Medicaid context.
    The Departments are finalizing the final rules as proposed and, 
therefore, all plans subject to section 2715A of the PHS Act must 
comply with these requirements. The Departments agree with commenters 
that sections 1311(e)(3) of PPACA and 2715A of the PHS Act do not apply 
to expatriate health plans \231\ and, therefore, such plans are not 
subject to the requirements in the final rules. Furthermore, the 
Departments' authority for the final rules derive from section 2715A of 
the PHS Act, which only applies to group health plans and health 
insurance issuers offering group or individual health insurance 
coverage, and not Medicaid Managed Care Organization plans, Medicare-
Medicaid Plans, and Denominational Health Plans.
---------------------------------------------------------------------------

    \231\ 42 U.S.C. 18014.
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Interaction of Final Rules With 45 CFR 156.220
    The Departments recognize that health insurance issuers offering 
group or individual health insurance coverage as QHPs through an 
Exchange are already subject to reporting requirements under 45 CFR 
156.220 that implement the transparency in coverage requirements of 
section 1311(e)(3) of PPACA. Pursuant to 45 CFR 156.220, issuers of 
QHPs offered through an individual market Exchange or a Small Business 
Health Options (SHOP) Exchange, including stand-alone dental plans, 
must submit specific information about their plans' coverage to the 
appropriate Exchange, HHS, and the state insurance commissioner, as 
well as make the information available to the public in plain language.
    The Departments acknowledge the similar purposes served by 45 CFR 
156.220 and the final rules. The Departments, however, note the final 
rules do not alter requirements under 45 CFR 156.220. Accordingly, QHP 
issuers must comply with both rules' requirements. If necessary and to 
the extent appropriate, HHS may issue future guidance to address QHP 
issuers' compliance with both 45 CFR 156.220 and the final rules.
2. Applicability Dates
    Except as otherwise provided for in the proposed MLR 
requirements,\232\ the Departments proposed that all the proposed 
requirements would become applicable for plan years (or in the 
individual market, policy years) beginning on or after one year after 
the finalization of the final rules. The Departments requested feedback 
about this proposed timing. In particular, the Departments were 
interested in information regarding the time necessary to develop cost 
estimation tools and machine-readable files. The Departments are 
finalizing a modified applicability timeline for the machine-readable 
files at 26 CFR 54.9815-2715A3, 29 CFR 2590.715-54.9815-2715A3, and 45 
CFR 147.212. The requirements to publish the machine-readable files 
will become effective for plan years (or in the individual market, for 
policy years) beginning on or after January 1, 2022. The Departments, 
in response to comments, are finalizing an applicability date that is 
generally one-year later than the proposed applicability date for 
complying with the internet-based self-service tool requirements. 
Specifically, plans and issuers will be allowed to phase in the 
requirements at 26 CFR 54.9815-22715A2, 29 CFR 2590.715-2715A2, and 45 
CFR 147.211 regarding the items and services included in the internet-
based self-service tool. Plans and issuers will be required to provide 
pricing information for a minimum of 500 items and services identified 
by the Departments beginning with plan years (or in the individual 
market, policy years) on or after January 1, 2023. Plans and issuers 
will be required to provide the pricing information through the 
internet-based self-service tool for all items and services by plan 
years (or in the individual market, policy years) beginning on or after 
January 1, 2024.
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    \232\ As noted above, HHS proposed and finalized that the 
amendment to the MLR regulation will become effective beginning with 
the 2020 MLR reporting year (for reports filed by July 31, 2021).
---------------------------------------------------------------------------

    The Departments are finalizing applicability dates that do not tie 
applicability timelines to the beginning of plan years (or in the 
individual market policy years) that begin one year after the effective 
date of the rules, as proposed. Because most plan and policy years 
begin on January 1st, the Departments are of the view that this change 
in the applicability date likely will not shorten the amount of time 
plans and issuers have to comply with the machine-readable file 
requirements, as it has been the Departments' intent, including under 
the proposed rules, to require calendar year plans and policies to come 
into compliance with the final rules by January 1, 2022. The changed 
timeline is therefore unlikely to lead to increased burdens or costs. 
The Departments are finalizing a 3-year applicability timeline for the 
internet-based self-service tool requirements. Under the proposed 
rules, plans and issuers would have had to comply with all relevant 
proposed requirements beginning with plan or policy years beginning on 
or after January 1, 2023. Under the final rules, full compliance with 
all requirements associated with the internet-based self-service tool 
will not be required until plan or policy years beginning on or after 
January 1, 2024. For these reasons, the final rule's applicability 
dates for the self-service tool requirements are also unlikely to lead 
to increased burdens or costs.
    Many commenters submitted comments regarding the proposed 
applicability date of the proposed rules. The majority of commenters 
strongly recommended delaying the proposed applicability date for the 
internet-based self-service tool and machine-readable file requirements 
of the rules for at least one year and up to five years from 
publication of the final rules.
    Commenters recommended delaying the applicability date of the final 
rules because complying with the requirements will require negotiations 
with administrative service providers, and the design, building, and 
testing of websites. Other commenters cited the challenges in accessing 
some of the required information from third parties and the technical 
challenges plans will likely face as additional reasons to delay the 
applicability dates of these requirements. Additionally, commenters 
noted that the proposed rules would require disclosure of large volumes 
of data, which will have to be coordinated among various parties and 
for which systems will need to be put into place to ensure timely, 
accurate disclosure. Some commenters noted that a delay would be needed 
due to complex operational and compliance issues related to contracting 
with TPAs, ownership of data, and building and operating new IT 
systems.
    Commenters also cited vendor supply/demand challenges; extensive 
technology design, development, and deployment work; amending 
agreements with third parties; financing required to meet the 
requirements of the final rules; and time needed to test the tools for 
consumer use as reasons to delay the applicability date. One commenter 
noted that their current price estimator tools took considerable time 
and resources to develop, and large portions of a tool's underlying 
logic or feature set may not be compatible with the approach envisioned 
in the proposed rules. Moreover, testing, evaluating, and resolving 
these types of issues will require significant investment in IT 
development, numerous iterations of quality assurance and consumer 
testing, extensive education and training for plan staff, and 
development of new consumer-facing materials, among other

[[Page 72253]]

challenges. Another commenter recommended that employers/plan sponsors 
should not have to comply with the final rules until the first day of 
the first plan year that is two years after the date on which the rules 
are published. Similarly, commenters requested a lengthy phase-in 
period to give employers, third parties, issuers, and health care 
providers time to modify their contractual agreements to provide all of 
the data the proposed rules would require to be disclosed.
    A few commenters stated the Departments severely underestimated the 
time needed to implement the machine-readable files. The commenter 
noted that the timeline to implement the machine-readable files is very 
short, which could compromise the integrity of the files and lead to 
unintended consequences for consumers. Another commenter noted that, if 
not eliminated, the requirement to make machine-readable files 
available should be applicable no earlier than plan or policy years 
beginning three years after the date the rules are finalized.
    As discussed in the economic impact analysis, the Departments are 
of the view that developing the machine-readable files should be 
straightforward for most plans and issuers and that plans and issuers 
will incur limited additional administrative burdens or costs after the 
one-time initial file development. The development activities needed to 
establish the machine-readable files involve gathering, formatting, and 
making publicly available already existing data that plans and issuers 
use in their everyday operations. Plans and issuers need to keep this 
information current for operational purposes, and the additional costs 
and burdens of ensuring that the machine-readable files are updated 
monthly is expected to decrease in subsequent years and ultimately 
become minimal, as the Departments expect plans and issuers to automate 
the updating and verification processes in the years following initial 
development.
    The Departments are of the view that providing for a phased-in 
approach with regard to the number of items and services required for 
the internet-based self-service tool will provide more time for plans 
and issuers to plan for any increased costs, work with various vendors, 
perform user testing, and build appropriate technology to handle the 
disclosure of data through the internet-based self-service tool. 
Therefore, the final rules require plans and issuers to include in the 
internet-based self-service tool (and by request, through the paper 
method) 500 items and services identified by the Departments for plan 
years (in the individual market, for policy years) beginning on or 
after January 1, 2023, and all items and services for plan years (in 
the individual market, for policy years) beginning on or after January 
1, 2024. The Departments are of the view that providing more time to 
implement the internet-based self-service tool while generally 
maintaining the timeline for the machine-readable files, strikes the 
appropriate balance between minimizing burdens for issuers and 
maximizing price transparency for the public. Providing information to 
the public through the machine-readable files sooner will also 
accelerate researchers' and third-party developers' access to pricing 
information and potentially provide additional resources and incentives 
for plans to build out their own consumer-tools.
    Many commenters also encouraged the Departments to allow for a 
phased-in approach for the internet-based self-service tool and 
machine-readable files. Some commenters suggested finalizing a rule 
that allows for a phased-in approach for different group health plans 
and health insurance issuers of individual and group health insurance 
coverage to come into compliance with the final rules. Some commenters 
recommended finalizing a rule that allows for a phased-in approach by 
allowing smaller entities an extended implementation timeframe (that 
is, an additional 3 to 5 years) due to the disproportionate IT burden 
that will be placed on these smaller entities. Additionally, commenters 
were concerned that the rules may create a competitive advantage for 
larger issuers and TPAs.
    A few commenters recommended that the rules be implemented in a 
more gradual fashion by requiring a price transparency tool that covers 
a narrower data set initially, for example, one that includes only the 
most common shoppable services. These commenters asserted that, over 
time, this scope could be broadened to be fully inclusive, but an 
initial narrow focus could increase the chance that patients have 
critical, actionable information as soon as possible.
    Other commenters recommended a phased approach that would focus 
first on the functionality providing the most value to consumers to 
establish a baseline standard of price transparency across plans, while 
allowing time for the industry to solve more difficult technical 
challenges. Another commenter recommended allowing employers that have 
highly customized benefit structures additional time to implement the 
internet-based self-service tool. One commenter recommended allowing 
for a transition period for issuers and plans to use their current 
tools to meet the requirements.
    A few commenters recommended including quality metrics. These 
commenters noted that requiring quality information in the disclosures 
would take additional time. In particular, one commenter was concerned 
that in the absence of quality data, price transparency could actually 
increase spending. The commenter therefore recommended delaying the 
implementation of the final rules until quality information, such as 
information related to patient satisfaction and experience, adherence 
to clinical standards and evidence-based medicine, and patient safety 
and clinical outcomes, could be incorporated. Another commenter stated 
that, if pharmacy quality information could be included, the 
Departments would need to provide for several years to transform 
existing consensus-based processes to identify appropriate quality 
metrics to include health plans serving different populations. Another 
commenter urged the Departments to perform a study on the effects of 
price transparency and the potential consequences on consumers seeking 
care to better understand how best to integrate quality information 
alongside prices to allow consumers to evaluate the services that best 
respond to their individual needs.
    As the Departments explain in section II.C.1 of this preamble, 
government and private sector actors are working to develop and 
implement reliable and reasonable quality measures that can be applied 
to produce quality rating information that consumers may access and 
consider alongside pricing. As commenters acknowledged, delaying the 
final rules for the purpose of requiring the integration of quality 
information with price information would require several additional 
years. While the Departments appreciate the value of quality 
information to informed health care decision-making, the Departments 
are of the view that price transparency in health coverage must not be 
delayed for years when some quality information is already available or 
under development. Indeed, the Departments expect that the ready 
availability of pricing information will create greater consumer 
interest in quality information and other data relevant to health care 
decision-making, and that the market will respond to provide such 
information through innovative resources such as online tools and 
mobile applications. The Departments anticipate that innovators will 
seek ways to best present and

[[Page 72254]]

integrate pricing and quality data. However, the Departments also will 
consider what next steps are appropriate and feasible within the 
Departments' current authorities, including the possibility of 
conducting a study to evaluate how to best integrate quality 
information alongside prices. For these reasons and those noted earlier 
in this preamble, the Departments decline to require plans and issuers 
to include quality information in the disclosures required by the final 
rules.
    The Departments are finalizing the applicability dates of the final 
rules as described earlier in this preamble. The Departments are of the 
view that the additional time and flexibility regarding the internet-
based self-service tool will help address the concerns commenters 
raised regarding smaller entities' ability to comply with these 
requirements.

B. Enforcement and Good Faith Special Applicability

    The preamble to the proposed rules did not discuss how the proposed 
rules would be enforced. State regulators, in their comments to the 
proposed rules, sought greater clarity on how the proposed rules' 
requirements would be enforced as specifically applied to health 
issuers in the individual and group markets. Section 1311(e)(3) is 
located in title I of PPACA and, under section 1321(c)(2) of PPACA is 
subject to the enforcement scheme set forth in section 2723 of the PHS 
Act. Similarly, section 2715A of the PHS Act is subject to the 
enforcement scheme set forth in section 2723 of the PHS Act. Therefore, 
states will generally be the primary enforcers of the requirements 
imposed upon health insurance issuers by the final rules.\233\ The 
Departments expect to work closely with state regulators to design 
effective processes and partnerships for enforcing the final rules.
---------------------------------------------------------------------------

    \233\ DOL has jurisdiction to enforce the final rules as they 
apply to group health plans subject to ERISA. Treasury has 
jurisdiction over certain church plans. HHS has jurisdiction over 
non-Federal governmental plans and over health insurance issuers 
where the HHS Secretary determines that a state has failed to 
substantially enforce the requirements. OPM has jurisdiction over 
the Federal Employees Health Benefits Plans.
---------------------------------------------------------------------------

    The proposed rules included a special applicability provision to 
address circumstances in which a group health plan or health insurance 
issuer, acting in good faith, makes an error or omission in its 
disclosures. Specifically, a plan or issuer would not fail to comply 
with the proposed rules solely because it, acting in good faith and 
with reasonable diligence, made an error or omission in a disclosure, 
provided that the plan or issuer corrects the information as soon as 
practicable. Additionally, to the extent such an error or omission was 
due to good faith reliance on information from another entity, the 
proposed rules included a special applicability provision under which, 
to the extent compliance would require a plan or issuer to obtain 
information from any other entity, the plan or issuer would not fail to 
comply with this section because it relied in good faith on information 
from the other entity, unless the plan or issuer knew, or reasonably 
should have known, that the information was incomplete or inaccurate. 
Under the proposed rules, if a plan or issuer had knowledge that such 
information was incomplete or inaccurate, the plan or issuer would be 
required to correct the information as soon as practicable.
    Furthermore, the proposed rules also included a special 
applicability provision to account for circumstances in which a plan or 
issuer fails to make the required disclosures available due to its 
internet website being temporarily inaccessible. Accordingly, the 
proposed rules provided that a plan or issuer would not fail to comply 
with this section solely because, despite acting in good faith and with 
reasonable diligence, its internet website is temporarily inaccessible, 
provided that the plan or issuer makes the information available as 
soon as practicable.
    The Departments solicited comments regarding whether, in addition 
to these special applicability provisions, additional measures should 
be taken to ensure that plans and issuers that have taken reasonable 
steps to ensure the accuracy of required information disclosures are 
not exposed to liability by virtue of providing such information as 
required by the proposed rules.
    In general, commenters supported the good faith special 
applicability provisions (also referred to as ``safe harbors'') and 
recommended certain clarifications. One commenter requested 
clarification regarding how the Departments would determine whether a 
plan or issuer acted in ``good faith'' and with ``reasonable 
diligence.'' Another commenter requested additional guidance on what it 
would mean to ``correct'' information, and specifically whether this 
requirement would apply on a prospective or retrospective basis. 
Another commenter recommended the Departments allow health plans 30 
days to update accumulated amounts in the internet-based self-service 
tool.
    The Departments are finalizing the ``good faith'' safe harbor as 
proposed. While ``good faith'' is not explicitly defined in the final 
rules, it is an established legal and business term that is generally 
understood to involve honesty in fact and the observance of reasonable 
commercial standards of fair dealing, according to the Uniform 
Commercial Code.\234\ Efforts to correct omitted or erroneous 
information should proceed promptly after the plan or issuer is 
informed of the error. At a minimum, correcting information should 
include replacing the incorrect information, and may include notifying 
those affected of the error and the correction, using digital or 
written communications to notify affected participants, beneficiaries, 
and enrollees, and posting a notice on the internet website of the 
expected time before the error will be corrected.
---------------------------------------------------------------------------

    \234\ ``Uniform Commercial Code. General Definitions.'' Cornell 
Law School Legal Information Institute. Available at: https://www.law.cornell.edu/ucc/1/1-201#Goodfaith.
---------------------------------------------------------------------------

    The Departments received few comments on the good faith special 
applicability provision to account for circumstances in which a plan or 
issuer fails to make the required disclosures available due to its 
internet website being temporarily inaccessible. One commenter 
recommended that the website inaccessibility safe harbor be expanded to 
cover situations in which the internet-based self-service tool or 
machine-readable files are temporarily inaccessible, including because 
the internet website is inaccessible. This clarification would cover 
other technical issues, for example, that may affect only these 
resources, even though the remainder of the issuer's or plan's website 
is accessible.
    Several commenters recommended that the Departments expand the 
``safe harbor'' to account for additional circumstances. Commenters 
recommended that a safe harbor be created for plans that do not have 
direct access to negotiated in-network rates and allowed amounts, or 
information regarding reference based re-pricing in real time, and that 
may be unable to obtain some of the required information despite good 
faith efforts. For example, commenters recommended exempting employers, 
plan sponsors, and self-insured plans that rely on TPAs from liability 
if they have made good faith efforts to obtain the required data but 
have failed to do so. Commenters also recommended exempting plan 
sponsors that have been unable to procure third-party vendors from 
liability if these plans sponsors have acted in good faith. One 
commenter recommended that the Departments finalize a good faith 
special applicability provision to protect

[[Page 72255]]

health plans and issuers that provide cost estimates that meet the 
requirements of the final rules if the estimates do not match the 
amounts actually paid by participants, beneficiaries, or enrollees. 
This commenter also requested that this safe harbor be extended to the 
cost-sharing estimate requirements.
    Commenters also recommended that the Departments consider a safe 
harbor provision for covered entities that clearly provides that 
issuers and plans are not responsible for the downstream privacy and 
security of PHI shared by a participant, beneficiary, or enrollee with 
a third-party application consistent with the recent guidance issued by 
the HHS OCR.\235\ Another commenter recommended the creation of 
additional safe harbor provisions to allow and encourage health care 
organizations to share threat information about security risks and 
incidents linked to third-party applications.
---------------------------------------------------------------------------

    \235\ ``HHS FAQ.'' United States Department of Health and Human 
Services. Available at: https://www.hhs.gov/hipaa/for-professionals/faq/3009/does-a-hipaa-covered-entity-bear-liability.html.
---------------------------------------------------------------------------

    One commenter noted that disclosure of pricing information through 
the machine-readable files and cost-sharing tool raises concerns for 
plan sponsors about the potential for increased litigation under ERISA 
based on the release of payer-specific negotiated rates. The commenter 
encouraged DOL to effectively and expressly address this issue so that 
any disclosure requirement is crafted in a way that does not increase 
fiduciary liability for employer plan sponsors. The commenter 
recommended that DOL consider proposing a ``safe harbor'' to protect 
employers from downstream litigation risk related to the public 
disclosure of negotiated rates and disclosure of negotiated rates 
through the cost-sharing tool. Such a ``safe harbor'' could provide 
that so long as an employer can demonstrate it ``considered'' 
negotiated rates as part of its decision-making process in selecting an 
administrative service organization (ASO) for its plan, so that it 
would not be deemed to have acted imprudently as a fiduciary for 
purposes of ERISA with respect to the selection of the ASO by virtue of 
the negotiated rates. While the Departments appreciate this comment 
regarding increased litigation under ERISA, this request is beyond the 
scope of this rulemaking.
    Finally, several commenters requested a deemed compliance standard 
for employers or plans that already offer transparency tools designed 
to assist participants with cost estimates and obtaining up-to-date 
cost-sharing information or for plans and issuers that voluntarily 
submit their data to multi-payer claims databases. Other commenters 
noted that some existing state laws require plans to provide the 
ability for enrollees to look up their out-of-pocket costs for several 
hundred procedures online or by phone. These commenters recommended--to 
reduce burden on issuer implementation and avoid duplication of 
effort--that health plans that comply with existing state laws 
requiring treatment cost-estimator functionality be deemed in 
compliance with any similar Federal requirements. Another commenter 
recommended this safe harbor be extended to the machine-readable files.
    The Departments understand that states have been at the forefront 
of transparency initiatives and some have required disclosure of 
pricing information for years. However, it is important to note that 
states do not have authority to require such disclosures by plans 
subject to ERISA, which compose a significant portion of the private 
market.\236\ As a result, a significant portion of consumers do not 
have access to information on their plans, even in states that have 
implemented transparency requirements. The Departments are also aware 
that many plans and issuers have moved in the direction of increased 
price transparency. Despite these price transparency efforts, the 
Departments understand that there continues to be a lack of easily 
accessible pricing information for consumers to use when shopping for 
health care services. The final rules are meant, in part, to address 
this lack of easily accessible pricing information, and represent a 
critical part of the `Departments' overall strategy for reforming 
health care markets by promoting transparency, competition, and choice.
---------------------------------------------------------------------------

    \236\ Panis, C. W. A., and Brien, M. J. ``Self-Insured Health 
Benefit Plans 2019: Based on Filings through Statistical Year 
2016.'' Deloitte. January 7, 2019. Available at: https://www.dol.gov/sites/dolgov/files/EBSA/researchers/statistics/retirement-bulletins/annual-report-on-self-insured-group-health-plans-2019-appendix-b.pdf.
---------------------------------------------------------------------------

    The Departments will take these additional safe harbor 
recommendations into consideration for future rulemaking. The 
Departments are not including in the final rules any safe harbor rule 
that would substitute the offering of existing tools or compliance with 
existing state transparency laws. The Departments have concluded that 
additional price transparency efforts are necessary to empower 
consumers, promote competition in the health care industry, and reduce 
the overall rate of growth in health care spending. The additional safe 
harbors recommended by commenters would not allow for the consistent 
baselines and standards that the Departments seek to establish with the 
final rules. As noted above, one of the goals of the final rules is to 
empower plans and issuers in the commercial health care market to 
innovate and compete in an industry where innovation and competition 
currently appear to be limited. By requiring public disclosure of 
pricing data a year after the effective date of the rules, the final 
rules will encourage issuers, TPAs, and third-party developers and 
innovators to create or enhance their shopping tools, including the 
self-service tools also required by these final rules. The development 
of these tools in turn will create additional consumerism, which will 
lead to lower prices throughout the health care market. This impact is 
only achievable, however if all applicable plans and issuers are held 
to the same standards and timelines. Furthermore, limiting the 
applicability of the final rules would undermine the Departments' 
overall strategy for reforming health care markets by promoting 
transparency, competition, and choice across the health care industry.
    The Departments are of the view that, ultimately, plans and issuers 
are responsible for complying with the requirements outlined in the 
final rules. The Departments understand that plans may have to make 
adjustments to their contracts and as such, the Departments have 
factored that into the burden estimates and timing requirements for 
implementation explained elsewhere in the final rules. As plans and 
issuers are responsible for complying with the requirements outlined in 
the final rules, they should carefully examine the capacity of any 
partners they may contract with to provide the required information. 
Finally, as discussed earlier in this preamble, the Departments 
recognize the privacy concerns raised by commenters, but are of the 
view that the final rules, which include an exemption for providers 
with fewer than 20 different claims for payment and do not require any 
disclosure of PII or PHI through an API, and the continuing obligation 
of plans and issuers to comply with applicable privacy requirements, do 
not raise sufficient privacy concerns to require an additional privacy-
related safe harbor.

V. Economic Impact Analysis and Paperwork Burden

A. Summary/Statement of Need

    This regulatory action is taken, in part, in light of Executive 
Order 13877

[[Page 72256]]

directing the Departments to issue an ANPRM, soliciting comments 
consistent with applicable law, requiring providers, health insurance 
issuers, and self-insured group health plans to provide or facilitate 
access to information about expected out-of-pocket costs for items or 
services to patients before they receive care. As discussed previously 
in this preamble, in response to Executive Order 13877, the Departments 
published the proposed rules entitled ``Transparency in Coverage.'' 
Despite the growing number of initiatives and the growing consumer 
demand for, and awareness of, the need for pricing information, there 
continues to be a gap in easily accessible pricing information for 
consumers to use to shop for health care items and services. The final 
rules add new requirements to 26 CFR part 54, 29 CFR part 2590, and 45 
CFR part 147 aimed at addressing this gap, and are a critical part of 
the Administration's overall strategy for reforming health care markets 
by promoting transparency and competition, creating choice in the 
health care industry, and enabling consumers to make informed choices 
about their health care. As discussed later in the RIA, the Departments 
acknowledge that more than 90 percent of plans, issuers, and TPAs 
currently provide some form of internet-based self-service tool to 
their consumers. However, as stated in section I.B of the final rules, 
the Departments understand that utility and accuracy among existing 
issuer cost estimator tools varies widely. Based on issuer 
demonstrations of their tools given to the Departments, some estimators 
reflect a combined range of possible costs; others give estimates based 
off historical pricing or claims data from various sources, while 
others are restricted in the types of procedures they include. 
Moreover, some existing issuer tools do not take into account a 
participant's, beneficiary's, or enrollee's accumulators.\237\ The 
Departments are of the view that it is important to establish a minimum 
set of standards of what is acceptable so that consumers can take 
advantage of the information market-wide. Consistency will give 
consumers confidence that the information presented by these tools will 
not change arbitrarily. Reliability assures consumers that information 
in these tools accurately reflects plans' and issuers' best estimates 
of costs. The availability of these tools across all markets will 
ensure that no participant, beneficiary, or enrollee is denied access 
to the benefits of this rule and the Departments are of the view that 
this consistency is vital for success and utilization. As discussed 
previously in section I.B, state transparency requirements are 
generally not applicable to self-insured group health plans, and as a 
result, a significant portion of consumers may not have access to 
information on their plans and their health care costs. The Departments 
encourage additional functionality and innovation to be built around 
the requirements of the final rules, but believe a baseline is required 
to give the participant, beneficiary, or enrollee some confidence that 
no matter which plans tool they used, it would at least offer the same 
basic information. By requiring group health plans and health insurance 
issuers to disclose to participants, beneficiaries, or enrollees such 
individual's cost-sharing information for covered items or services 
furnished by a particular provider, the final rules provide them 
sufficient information to determine their potential out-of-pocket costs 
related to needed care and encourages them to consider price when 
making decisions about their health care.
---------------------------------------------------------------------------

    \237\ See also ``Are healthcare's cost estimate tools making 
matters worse for patients?'' Becker's Hospital CFO Report. 
Available at https://www.beckershospitalreview.com/finance/are-healthcare-s-cost-estimate-tools-making-matters-worse-for-patients.html (citing Gordon, E. ``Patients Want To Price-Shop For 
Care, But Online Tools Unreliable.'' NPR. November 30, 2015. 
Available at https://www.npr.org/sections/health-shots/2015/11/30/453087857/patients-want-to-price-shop-for-care-but-online-tools-unreliable) (``Some estimators reflect a combined range of possible 
costs, while others are based off historical pricing or claims data 
from various sources. Many online estimate tools are restricted in 
the types of procedures they include. . . .'').
---------------------------------------------------------------------------

B. Overall Impact

    The Departments have examined the impact of the final rules as 
required by Executive Order 12866 on Regulatory Planning and Review 
(September 30, 1993), Executive Order 13563 on Improving Regulation and 
Regulatory Review (January 18, 2011), the Regulatory Flexibility Act 
(RFA) (September 19, 1980, Pub. L. 96-354), section 202 of the Unfunded 
Mandates Reform Act of 1995 (March 22, 1995, Pub. L. 104-4), Executive 
Order 13132 on Federalism (August 4, 1999), the Congressional Review 
Act (5 U.S.C. 804(2)), and Executive Order 13771 on Reducing Regulation 
and Controlling Regulatory Costs (January 30, 2017).
    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, reducing costs, harmonizing rules, and promoting flexibility. 
A regulatory impact analysis (RIA) must be prepared for rules with 
economically significant effects ($100 million or more in any 1 year).
    Section 3(f) of Executive Order 12866 defines a ``significant 
regulatory action'' as an action that is likely to result in a rule: 
(1) Having an annual effect on the economy of $100 million or more in 
any 1 year, or adversely and materially affecting a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or state, local or tribal governments or communities 
(also referred to as ``economically significant''); (2) creating a 
serious inconsistency or otherwise interfering with an action taken or 
planned by another agency; (3) materially altering the budgetary 
impacts of entitlement grants, user fees, or loan programs or the 
rights and obligations of recipients thereof; or (4) raising novel 
legal or policy issues arising out of legal mandates, the President's 
priorities, or the principles set forth in the Executive order. An RIA 
must be prepared for major rules with economically significant effects 
($100 million or more in any 1 year), and a ``significant'' regulatory 
action is subject to review by the Office of Management and Budget 
(OMB). The Departments have concluded that the final rules are likely 
to have economic impacts of $100 million or more in at least 1 year, 
and, therefore, meet the definition of ``economically significant 
rule'' under Executive Order 12866. Therefore, the Departments have 
provided an assessment of the potential costs, benefits, and transfers 
associated with the final rules. OMB reviewed this regulation in 
accordance with the provisions of Executive Order 12866.
    Two commenters suggested that the proposed rules failed to comply 
with Executive Order 12866. Executive Order 12866 defines rules likely 
to have an economic impact in excess of $100 million as ``significant'' 
and requires that the agencies conduct an assessment of potential 
costs. The commenters suggested that the economic impact analysis and 
cost assessment the agencies provided for the proposed rules were short 
of the concrete, well-founded analysis required of the economic 
analysis directed by Executive Order 12866 that must accompany a 
proposed rulemaking as far-reaching, and potentially costly, as the 
proposed rules. One commenter suggested that the proposed rules were 
inconsistent with

[[Page 72257]]

both Executive Order 12866 and Executive Order 13563, both of which 
direct agencies to carefully consider alternatives to regulations an 
agency has deemed necessary, and to select the least burdensome 
approach available. The commenter maintained that the agencies did not 
adequately consider alternatives and are proposing an unnecessarily and 
excessively burdensome approach.
    After consideration and discussion of the comments related to 
proposed cost estimates received in response to the proposed rules, the 
Departments chose to reevaluate the cost estimates associated with the 
provisions in the final rules. The Departments also consulted with 
internal and external IT professionals to gain a better insight into 
what individuals and tasks would be needed to design, develop, and 
deploy the internet-based self-service tool and the three machine-
readable files required by the final rules. Based on this consultation 
and additional research, the Departments have chosen to increase the 
cost estimates to account for the updated understanding of the costs 
posed by the final rules, as well as the additional requirements 
included in the final rules. The Departments further discuss changes to 
the final cost estimates later in this preamble and in the associated 
ICR sections.
    The final rules will enable participants, beneficiaries, and 
enrollees to obtain information about their potential cost-sharing 
liability for covered items and services that they might receive from a 
particular provider by requiring plans and issuers to disclose cost-
sharing information as described at 26 CFR 54.9815-2715A2, 29 CFR 
2590.715-2715A2, and 45 CFR 147.211. As discussed earlier in section 
I.B. of the final rules, there has been a shift in the health care 
market from copayments to coinsurance. Coupled with increases in plans 
and coverages with high deductibles, generally requiring sizeable out-
of-pocket expenditures prior to receiving coverage under the terms of 
the plan or policy, participants, beneficiaries, and enrollees are now 
shouldering a greater portion of their health care costs than before. 
For example, over the period from 2008 to 2018, the average health care 
costs incurred by families covered by large employers--including 
premium contributions and out-of-pocket spending on health care 
services--have increased 67 percent from $4,617 to $7,726 annually. 
Over the same period, the average out-of-pocket costs alone have 
increased from $1,779 to $3,020 annually.\238\ The Departments are of 
the view that disclosure of pricing information is crucial for 
participants, beneficiaries, or enrollees to engage in informed health 
care decision-making and believe that with greater price transparency 
and access to more accurate and actionable pricing information, 
participants, beneficiaries, and enrollees will be able to consider the 
value of an item or service when making decisions related to their 
health care.
---------------------------------------------------------------------------

    \238\ Rae, M., Copeland, R., and Cox, C. ``Tracking the rise in 
premium contributions and cost-sharing for families with large 
employer coverage.'' Peterson-KFF. August 14, 2019. Available at: 
https://www.healthsystemtracker.org/brief/tracking-the-rise-in-premium-contributions-and-cost-sharing-for-families-with-large-employer-coverage/?utm_campaign=KFF-2019-Health-Costs&;amp;utm_medium=email&amp;_hsenc=p2ANqtz-
_72_RHB9Twe8BpbqOg28rdlGqxq_SBgV6rB-
kbC4PuYMItIOSxHQLmh_D3OH4GOnUKZXa8&amp;utm_source=hs_email&am
p;hsCtaTracking=04848753-3235-436e-a0de-ae8238ad00ad%7Cc1097ae0-
0521-4e9a-8e45-e5a87f67af4a.
---------------------------------------------------------------------------

    In addition, as described at 26 CFR 54.9815-2715A1, 54.9815-2715A2, 
and 54.9815-2715A3, 29 CFR 2590.715-2715A1, 2590.715-2715A2, and 
2590.715-2715A3, and 45 CFR 147.210, 147.211 and 147.212, the final 
rules require group health plans and health insurance issuers to make 
public in-network rates, including amounts in underlying fee schedules, 
negotiated rates, and derived amounts for in-network providers; 
historical allowed amounts paid to out-of-network providers and billed 
charges for all covered items and services; and negotiated rates and 
historical net prices for prescription drugs. The Departments are of 
the view that these requirements, through providing greater 
transparency and access to pricing information, will provide 
consistency and confidence across all internet-based self-service 
tools. Access to data provided by the three machine-readable files will 
ensure that all consumers have the pricing information they need in a 
readily accessible format, which could inform their choices, in 
addition to potentially impacting cost disparities and improvements to 
the overall functioning of the health care market. The Departments are 
of the view that greater price transparency and the availability of 
price information to the public will empower the 26.1 million uninsured 
consumers \239\ to make more informed health care decisions and allow 
consumers who wish to shop among plans and coverage options to better 
understand the potential cost of their care. Public availability of 
this information will also allow third-party IT developers to provide 
consumers with more accurate information on provider, plan, and issuer 
value, as well as prescription drug pricing information, ensuring that 
such information is available to consumers where and when it is needed. 
Furthermore, providing the in-network rates along with out-of-pocket 
costs will also show what future costs could be for a participant, 
beneficiary, or enrollee for the same service, depending on the 
progress of his or her deductible. This information will help consumers 
make informed decisions related to their health care needs now and in 
the future.
---------------------------------------------------------------------------

    \239\ ``Income, Poverty and Health Insurance Coverage in the 
United States: 2019.'' United States Census Bureau. September 15, 
2020. Available at: https://www.census.gov/newsroom/press-releases/2020/income-poverty.html.
---------------------------------------------------------------------------

    The Departments received many comments regarding the underlying 
economic principles of the proposed rules. Many commenters were 
concerned the rules as proposed could disrupt contract negotiations 
between providers and health plans and result in providers acting in 
anticompetitive ways (such as collusion, consolidation, or price 
fixing), resulting in increased rates (a so-called ``race to the 
top''). Some of these commenters were particularly concerned with the 
potential of the Departments' proposals to spur anticompetitive 
behavior in highly concentrated markets. Several of these commenters 
cited the FTC's concerns about the potential negative impacts of price 
transparency on competition in the health insurance markets, including 
the possibility that providers (or sellers) will coordinate their 
behavior or bid less aggressively, leading to higher prices. Commenters 
also cited similar concerns expressed by the Department of Justice 
(DOJ) and the Congressional Budget Office (CBO) about the unintended 
consequences of releasing competitive proprietary information such as 
the in-network rates of plans and issuers. Commenters further stated 
increased costs would negatively impact consumer choice and reduce the 
affordability of health insurance coverage of low- and middle-income 
consumers. One commenter expressed concern that plans and issuers could 
also coordinate to reduce provider payment levels below market 
competitive rates, which could negatively impact patient access to 
quality care. In contrast, one commenter suggested that concerns about 
potential collusion among providers are unfounded as local markets are 
currently populated by a limited number of providers who tend to have 
knowledge of each other's rates and

[[Page 72258]]

consumers currently receive pricing information through EOBs. The 
commenter also expressed the opinion that the argument put forth by 
issuers that in-network rates are trade secrets is self-serving and 
benefits them at the expense of consumers and the public.
    One issuer stated that its experience in state markets where health 
care price transparency was implemented (Massachusetts, New Hampshire, 
and Maine) do not provide evidence that transparency efforts produce 
reduced health care prices and that state price transparency efforts 
negatively affected issuers' ability to negotiate lower rates. However, 
another commenter cited a study of the New Hampshire transparency 
initiative that found ``a significant reduction in negotiated prices.'' 
\240\
---------------------------------------------------------------------------

    \240\ Brown Z. Y. ``Equilibrium Effects of Health Care Price 
Information.'' 101 Review of Economics & Stat. 699 (2019). Available 
at: http://www-personal.umich.edu/~zachb/
zbrown_eqm_effects_price_transparency.pdf.
---------------------------------------------------------------------------

    Some commenters suggested that the Departments should ensure that 
strong protections are in place to prevent price fixing or 
unsustainably low reimbursement for care before requiring public 
disclosure of in-network and out-of-network rates. For example, to 
address concerns about price fixing, one commenter suggested working 
closely with the FTC and other appropriate Federal and state 
authorities to monitor health care provider markets for any incidence 
of collusion, potentially leading to the prosecution of entities for 
violations that raise costs for patients and plan sponsors.
    By contrast, several commenters expressed the view that the public 
disclosure of payer-specific in-network rates and transparency would 
promote competition in the health insurance markets and will drive down 
costs, which could result in lower, more reasonable health care prices. 
One commenter cited a paper that reviewed outcomes after the 
implementation of price transparency efforts and found evidence for 
behavioral changes that could place pressure on providers to lower 
rates.\241\ Specifically, the paper found evidence of shopping activity 
among consumers, especially younger consumers, evidence of development 
activity by third-party application developers using this information, 
and evidence that employers will use the data to negotiate better 
rates. Another commenter noted that employers and health plans would be 
able to leverage the information to negotiate rates that are more 
reasonable and encourage patients to access higher-value providers.
---------------------------------------------------------------------------

    \241\ Blase, B. ``Transparent Prices Will Help Consumers and 
Employers Reduce Health Spending.'' Texas Public Policy Foundation. 
September 27, 2019. Available at: https://galen.org/assets/Blase_Transparency_Paper_092719.pdf.
---------------------------------------------------------------------------

    As noted previously in sections I.B and I.C of this preamble, the 
Departments are of the view that greater price transparency and the 
public disclosure of pricing information is necessary to enable 
consumers to use and understand pricing data in a manner that will 
increase competition, improve markets, reduce disparities in health 
care prices, and potentially lower health care costs. The Departments 
continue to be of the view that effective downward pressure on health 
care pricing cannot be fully achieved without increased price 
transparency and the public disclosure of pricing information. As 
discussed in section E.3 of this preamble, the Federal Government 
maintains laws and processes to investigate reports of collusive or 
other anticompetitive practices.
    Section 1311(e)(3) of PPACA and section 2715A of the PHS Act, as 
well the authority vested in the Departments, grant participants, 
beneficiaries, enrollees, and the public the right to know the prices 
of health care items and services, which will enable them make informed 
health care purchasing decisions. Without access to price information, 
consumers are unable to accurately assess and choose the least costly 
care and coverage options among all available options, and choice 
cannot be meaningful without adequate information about those choices. 
Currently, insured participants, beneficiaries, or enrollees, as well 
as uninsured consumers, do not have access to adequate and accessible 
pricing information related to care and coverage. The potential benefit 
of consumer access to this information is enormous. Furthermore, the 
Departments are aware of consumer demand for this information. 
According to a May 2019 poll conducted by the Harvard Center for 
American Political Studies, 88 percent of U.S. registered voters (out 
of a sample of 1,295) stated they would support an initiative by the 
government to mandate issuers, hospitals, doctors and other providers 
to disclose the cost of their services and discounted or negotiated 
rates between these groups.\242\ Furthermore, 65 percent of these 
individuals would favor these initiatives even if in the short term 
they lead to an increase in prices by some providers.\243\ The vast 
majority of comments the Departments received in response to the 
proposed rules were from individuals who expressed general support for 
the transparency proposals and expressed frustration at the lack of 
information available about health care pricing and a desire to have 
access to this information.
---------------------------------------------------------------------------

    \242\ ``The CAPS Harris Poll.'' Harvard Center for American 
Political Studies, 45. May 2019. Available at: https://harvardharrispoll.com/wp-content/uploads/2019/06/HHP_May19_vF.pdf?utm_source=hs_email&utm_medium=email&_hsenc=p2ANqtz--NgSdTYggGUP4tWyR2IEQ7i8TCg1s3DcHuQyhErIgkX3KFUi3SFgl9OZKm4-JUOOi9tmMQ.
    \243\ Id.at 46.
---------------------------------------------------------------------------

    As noted in the preamble to the proposed rules and earlier in this 
preamble, the belief that greater price transparency will reduce health 
care costs by encouraging providers to offer more competitive rates is 
consistent with the predictions of standard economic theory and a 
number of empirical studies regarding price transparency in other 
markets. The Departments agree, however, that the health care market 
presents unique challenges. The Departments reviewed a study that notes 
certain special characteristics of the health care market, including 
that: (1) Diseases and treatments affect each patient differently, 
making health care difficult to standardize and making price dispersion 
difficult to monitor; (2) patients cannot always know what they want or 
need, and physicians effectively must serve as their agents (for 
example, by recommending specialists and determining whether a patient 
is admitted to a hospital); and (3) patients are typically in a poor 
position to choose a hospital because they do not have sufficient 
information about hospital quality and costs.\244\ This study suggests 
that these special characteristics of the health care market, among 
other relevant factors, make it difficult to draw conclusions based on 
empirical evidence gathered from other markets. Nevertheless, the same 
study concluded that despite these complications, greater price 
transparency, such as access to posted prices, might lead to more 
efficient outcomes and lower prices.
---------------------------------------------------------------------------

    \244\ Austin, A. D., and Gravelle, J. G. ``Congressional 
Research Service Report to Congress: Does Price Transparency Improve 
Market Efficiency? Implications of Empirical Evidence in Other 
Markets for the Healthcare Sector.'' Congressional Research Service. 
July 24, 2007. Available at: https://fas.org/sgp/crs/secrecy/RL34101.pdf.
---------------------------------------------------------------------------

    Another study evaluated hospital discharge information following 
the publication of prices.\245\ Hospital

[[Page 72259]]

utilization increased for hospitals that priced below the mean market 
price, while hospital utilization decreased for hospitals that priced 
above the mean market price.
---------------------------------------------------------------------------

    \245\ Kim, M. ``The effect of hospital price transparency in 
health care markets.'' University of Pennsylvania. 2011. Available 
at: https://repository.upenn.edu/dissertations/AAI3475926.
---------------------------------------------------------------------------

    In a recent study of the New Hampshire price transparency tool, 
researchers found that health care price transparency could shift care 
to lower-cost providers and save consumers and payers money.\246\ The 
study specifically focused on X-rays, CT scans, and MRI scans; it 
determined that the transparency tool reduced the costs of medical 
imaging procedures by five percent for patients and four percent for 
issuers; and estimated savings of $7.9 million for patients and $36 
million for issuers over a 5-year period.
---------------------------------------------------------------------------

    \246\ Brown, Z.Y. ``Equilibrium Effects of Health Care Price 
Information.'' 100 Rev. Econ. & Stat. 1. (2018). Available at: 
http://www-personal.umich.edu/~zachb/
zbrown_eqm_effects_price_transparency.pdf.
---------------------------------------------------------------------------

    In another example, in Kentucky, public employees were provided 
with a price transparency tool that allowed them to shop for health 
care services and share in any cost-savings realized by seeking lower-
cost care.\247\ Over a 3-year period, 42 percent of eligible employees 
used the program to research information about prices and rewards.\248\ 
The study found that 57 percent of those that used the transparency 
tool chose at least one cost-effective provider, saving state taxpayers 
$13.2 million and resulting in $1.9 million in cash benefits paid to 
public employees for seeking lower cost care.\249\
---------------------------------------------------------------------------

    \247\ Rhoads, J. ``Right to Shop For Public Employees: How 
health care incentives are saving money in Kentucky.'' The Dartmouth 
Institute for Health Policy and Clinical Practice. March 8, 2019. 
Available at: https://thefga.org/wp-content/uploads/2019/03/RTS-Kentucky-HealthCareIncentivesSavingMoney-DRAFT8.pdf.
    \248\ Id.
    \249\ Id.
---------------------------------------------------------------------------

    The Departments recognize the transparency efforts in New Hampshire 
and Kentucky are not necessarily generalizable nationwide and provide 
only some empirical data to support the overarching goal of these final 
rules that transparency in health care can lead to savings for 
consumers and issuers by putting downward pressure on prices. The 
Departments are of the view that consumers equipped with information 
about the cost of their medical options prior to receiving care will 
allow them to be able to make more informed decisions that will put 
additional downward pressure on health care costs. While the often-
unequal relationship between patients and providers can sometimes mean 
that patients are not always best equipped to determine their care, 
there are many health care purchasing decisions that could and should 
take into account a patient's financial concerns. For instance, 
physician providers may also be able to provide health care 
transparency information when referring patients to specialists for in- 
or out-of-network care, such as for elective procedures. The pricing 
information, combined with the physician's advice, could help health 
care consumers evaluate options along the cost and quality spectrums 
and help guide them to high-value options. The Departments are of the 
view that health care pricing transparency may increase the impact of 
economic market forces on the health care markets, despite the health 
care market's unique characteristics. The Departments anticipate that 
once issuers, plans, and providers are aware that consumers can engage 
with the markets in an informed manner, they may adjust their costs to 
potentially be more competitive in their pricing of items and services.
1. Impact Estimates of the Transparency in Coverage Provisions and 
Accounting Table
    The final rules set forth requirements for group health plans and 
health insurance issuers to disclose to a participant, beneficiary, or 
enrollee, his or her cost-sharing information for covered items or 
services from a particular provider or providers. The final rules also 
include requirements for plans and issuers to disclose in-network rates 
(including negotiated rates, amounts in underlying fee schedules and 
derived amounts) for in-network providers, historical allowed amounts 
and billed charges for covered items and services provided by out-of-
network providers, and negotiated rates and historical net prices for 
prescription drugs through machine-readable files posted on a public 
internet website. In accordance with OMB Circular A-4, Table 2 depicts 
an accounting statement summarizing the Departments' assessment of the 
benefits, costs, and transfers associated with this regulatory action.
    The Departments are unable to quantify all benefits and costs of 
the final rules. The effects in Table 2 reflect non-quantified impacts 
and estimated direct monetary costs and transfers resulting from the 
provisions of the final rules for plans, issuers, beneficiaries, 
participants, enrollees, and state and the Federal Governments.

                        Table 2--Accounting Table
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Intended Outcomes:
     Provides consumers with a tool to determine their estimated
     out-of-pocket costs, potentially becoming more informed on the cost
     of their health care, which could result in lower overall costs if
     consumers choose lower-cost providers or items and services.
     Potential increase in timely payments by consumers of
     medical bills as a result of knowing their estimated overall costs
     prior to receiving services and having the ability to budget for
     expected health care needs.
     Potential profit gains by third-party mobile application
     developers by selling and exchanging consumer health data and
     potential benefits to consumers through the development of mobile
     applications that may be more user-friendly and improve consumer
     access to cost information, potentially resulting in reductions in
     out-of-pocket costs.
     Potentially enable consumers shopping for coverage to
     understand the in-network rates for providers and the negotiated
     rates and historical net prices for prescription drugs in different
     group and individual health plans available to them and choose a
     plan that could minimize their out-of-pocket costs.
     States could potentially use the In-network Rate and
     Prescription Drugs Files to determine if premium rates are set
     appropriately.
     Potential reduction in cross-subsidization, which could
     result in lower prices as prices become more transparent.
     Public posting of in-network rates (including negotiated
     rates, amounts in underlying fee schedules, and derived amounts),
     negotiated rates, and historical net prices for prescription drugs
     could facilitate the review of anti-trust violations and potential
     collusion.
     Potential for the disclosure of in-network rates to apply
     pressure on providers to bill less aggressively.
     Strengthening of stakeholders' ability to support
     consumers.
Benefits:
     Potential societal resource savings (non-quantified
     efficiency portion of any overall reduction in consumer health care
     expenditures).
     Potential to reduce the cost of surprise billing to
     consumers.
------------------------------------------------------------------------


[[Page 72260]]


 
                                                                       Low estimate    High estimate                     Discount rate
                               Costs:                                   (million)        (million)       Year dollar       (percent)      Period covered
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annualized Monetized ($/year)......................................         $4,080.2         $5,472.4             2020                7        2021-2025
                                                                             4,047.7          5,392.9             2020                3        2021-2025
--------------------------------------------------------------------------------------------------------------------------------------------------------


 
 
-------------------------------------------------------------------------
Quantitative:
     Cost to plans, issuers and TPAs to plan, develop, and build
     the required internet-based self-service tool and machine-readable
     files, to provide in-network rates for in-network providers and out-
     of-network allowed amounts, and negotiated rates and historical net
     prices for prescription drugs, maintain appropriate security
     standards and update and maintain the machine-readable files per
     the final rules.
     Increase operating costs to plans and issuers as a result
     of training staff to use the internet-based self-service tool,
     responding to consumer inquiries, and delivering consumer's cost-
     sharing information and required notices.
     Cost to plans and issuers to review all the requirements in
     the final rules.
Non-Quantified:
     Potential cost incurred by plans and issuers that wish to
     develop a mobile accessible version of their internet-based self-
     service tool.
     Potential exposure of consumers to identity theft as a
     result of breaches and theft of PII.
     Potential increase in cyber security costs by plans and
     issuers to prevent data breaches and potential loss of PII.
     Potential increase in out-of-pocket costs for consumers if
     providers or prescription drug manufacturers increase prices for
     items and services or plans and issuers shift those costs to
     consumers in the form of increased cost sharing other than
     increased deductibles.
     Potential costs to states to review and enforce provisions
     of the final rules.
     Potential increase in consumer costs if reductions in cross-
     subsidization are for uncompensated care, as this could require
     providers finding a new way to pay for those uncompensated care
     costs.
     Potential increase in health care costs if consumers
     confuse cost with quality and value of service.
     Potential costs to inform and educate consumers on the
     availability and functionality of an internet-based self-service
     tool.
     Potential consumer confusion related to low health care
     literacy and the potential complexity of internet-based self-
     service tools.
     Potential cost to plans and issuers to conduct quality
     control reviews of the information in the in-network rate, out-of-
     network allowed amounts, and prescription drug machine-readable
     files.
     Potential costs to plans, issuers, and TPAs if they are
     required to renegotiate contracts in order to remove gag clauses in
     order to meet the requirements of the final rules.
     Potential costs to plans, issuers, and TPAs if they incur
     use cases per user CPT licensure charges.
     Potential increase in costs to consumers and issuers if
     providers or prescription drug manufacturers engage in
     anticompetitive behaviors.
     Potential state and Federal costs associated with any
     changes in prescription drug prices resulting from the prescription
     drug machine-readable file release that may impact state Medicaid,
     CHIP, and Basic Health Plan programs and Federal health care
     programs.
------------------------------------------------------------------------


 
                                                  Estimate                       Discount rate
                 Transfers:                      (million)       Year dollar       (percent)      Period covered
----------------------------------------------------------------------------------------------------------------
Federal Annualized Monetized ($/year).......           $425.2             2020                7        2021-2025
                                                        423.0             2020                3        2021-2025
Other Annualized Monetized ($/year).........              274             2020                7        2021-2025
                                                          274             2020                3        2021-2025
----------------------------------------------------------------------------------------------------------------


 
 
-------------------------------------------------------------------------
Quantitative:
     Transfers from the Federal Government to consumers in the
     form of increased premium tax credits by approximately $1,047
     million in 2022, $623 million in 2023, $216 million in 2024, and
     $218 million in 2025 as a result of estimated premium increases by
     issuers in the individual market to comply with the final rules.
     Transfer from consumers to issuers in the form of reduced
     MLR rebate payments in the individual and group markets by
     approximately $120 million per year by allowing issuers to take
     credit for ``shared savings'' payments in issuers' MLR
     calculations.
     Transfers from providers to consumers and issuers of
     approximately $154 million per year as a result of lower medical
     costs for issuers and consumers by allowing issuers to share with
     consumers the savings that result from consumers shopping for care
     from lower-cost providers.
Non-Quantified:
     Potential transfer from providers to consumers facing
     collections to reduce the overall amounts owed to providers if they
     are able to use competitor pricing as a negotiating tool.
     Potential transfer from providers to consumers if there is
     an overall decrease in health care costs due to providers reducing
     prices to compete for customers.
     Potential transfer from issuers to consumers if there is an
     overall decrease in prescription drug costs due to potential
     reductions in prescription drug prices.
     Potential transfer from consumers to issuers or
     prescription drug manufacturers if drug manufacturers increase
     prescription drug prices.
     Potential transfer from consumers to providers if there is
     an increase in health care costs if providers and services increase
     their in-network rates to match those of competitors.
     Potential transfer from issuers to consumers if premiums
     decrease and potential transfer from consumers to issuers if
     premiums increase.
     Potential transfer from issuers to consumers and the
     Federal Government in the form of decreased premiums and premium
     tax credits as a result of issuers adopting provisions encouraging
     consumers to shop for services from lower-cost providers and
     sharing the resulting savings with consumers.
     Potential Transfers from the Federal Government to drug
     manufacturers, PBMs, and retail pharmacies for any change in
     prescription drug costs, which could impact prices paid by Federal
     health care programs should prescription drug costs increase.
     Potential Transfers from drug manufacturers, PBMs, and
     retail pharmacies to the Federal Government to for any change in
     prescription drug costs, which could impact prices paid by Federal
     health care programs should prescription drug costs decrease.
------------------------------------------------------------------------

    Table 2 provides the anticipated benefits and costs (quantitative 
and non-quantified) to plans and issuers to disclose cost-sharing 
information as described at 26 CFR 54.9815-2715A2, 29 CFR 2590.715-
2715A2, 45 CFR 147.211, and at 26 CFR 54.9815-2715A3, 29 CFR 2590.715-
2715A3, 45 CFR 147.212, and make public in-

[[Page 72261]]

network rates, amounts in underlying fee schedules, or derived amounts 
of in-network providers, out-of-network allowed amounts paid for 
covered items and services, and negotiated rates and historical net 
prices for prescription drugs. The following information describes the 
benefits and costs--qualitative and non-quantified--to plans and 
issuers separately for these three requirements. Some commenters stated 
that the Departments attempted analysis of the economic impact of the 
proposed rules was wholly inadequate and demonstrated that the 
Departments had not performed the basic fact-gathering and analysis 
that agencies are expected to undertake before undertaking notice-and-
comment rulemaking. These comments stated that the material the 
Departments presented under section VII, ``Economic Impact Analysis and 
Paperwork Burden'' was a patchwork of speculation and assumptions 
without any grounding in empirical data or analysis. The commenters 
further stated: The Departments listed 10 specific cost elements that 
they did not attempt to quantify; failed to include any consideration 
of regulatory familiarization costs; omitted consideration of training 
costs for both government employees who will be charged with enforcing 
the regulation and for the staff of regulated issuers and plan sponsors 
who will be responsible for compliance; and failed to account for the 
impact of the litigation burden on regulated issuers, plan sponsors, 
and the public judicial system. Another commenter suggested that the 
Departments failed to conduct an adequate cost-benefit analysis because 
they failed to consider and quantify regulatory alternatives, failed to 
quantify potentially knowable costs, and failed to quantify benefits or 
offer additional evidence supporting such benefits. Similarly, another 
commenter stated that the Departments' analysis was lacking in any 
quantitative assessment of benefits and did not credibly demonstrate 
that quantification of benefits might be difficult.
    The Departments consulted with various stakeholders in an effort to 
develop the economic analysis associated with the final rules, 
including the estimated costs. Additionally, the Departments requested 
comment on the estimates presented in the proposed rules to obtain more 
information and input with respect to the unquantified costs and 
benefits. The Departments received a number of comments related to the 
cost estimates, which are discussed later in the RIA and ICR sections. 
However, the Departments did not receive any comments providing 
actionable information as it relates to a number of the unquantifiable 
aspects of the proposed rules.
    As previously discussed in sections II.B.2.C and V.B.1 in this 
preamble, the Departments received comments related to the lack of 
estimated costs associated with the renegotiation of provider 
contracts, litigation expenses, and the removal of gag clauses. 
However, none of the comments received provided any information that 
would aid the Departments in estimating such costs. The Departments 
recognize that there are numerous aspects associated with the final 
rules that they are unable to estimate due to an overall lack of 
knowledge and information with regard to the actions that issuers, 
providers, or TPAs may be required to take to meet the requirements of 
the final rules. As discussed in sections V.C and D, the Departments 
have sought to provide estimates to account for the regulatory 
familiarization costs and other estimates related to the alternatives 
considered in the development of the final rules. For the final rules, 
the Departments have updated the regulatory review costs to include 
familiarization costs for each state DOI (including the District of 
Columbia), issuers, and TPAs.
2. Requirements for Disclosing Cost-Sharing Information to Participant, 
Beneficiaries, or Enrollees Under 26 CFR 54.9815-2715A2, 29 CFR 
2590.715-2715A2, and 45 CFR 147.211
Costs
    Under 26 CFR 54.9815-2715A2(b), 29 CFR 2590.715-2715A2(b), and 45 
CFR 147.211(b) of the final rules group health plans and health 
insurance issuers must disclose required cost-sharing information in 
accordance with prescribed method and format requirements upon the 
request of a participant, beneficiary, or enrollee. The required cost-
sharing information includes seven content elements, which are 
described in paragraph (b)(1) of the regulations and discussed earlier 
in section II.B.1 in this preamble. The quantitative costs associated 
with this requirement are detailed in the section VI.A.2--of the ICR 
later in this preamble.
    In addition to the costs described later in the corresponding ICR, 
the Departments recognize there may be other costs associated with this 
requirement that are difficult to quantify given the lack of 
information and data. For example, while the Departments are of the 
view that the overall effect of the final rules will lower health care 
costs, the Departments recognize that price transparency may have the 
opposite effect because in some markets where pricing is very 
transparent, price ranges can narrow in response to greater 
transparency, and costs can increase.\250\ In section II.B.2.C in this 
preamble, the Departments addressed comments related to the potential 
for unintended consequences related to the public disclosures required 
through the In-network Rate. The Departments note that the current lack 
of pricing information means that health care consumers are generally 
not able to include price in their health care purchasing decisions. 
The Departments are of the view that making pricing information 
available will begin to ameliorate distortions resulting from consumer 
decision-making not taking costs sufficiently into account. 
Additionally, the Departments recognize that states may incur 
additional costs to enforce the requirements in the final rules.
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    \250\ Kutscher, B. ``Report: Consumers demand price 
transparency, but at what cost?'' Modern Healthcare. June 2015. 
Available at: https://www.modernhealthcare.com/article/20150623/NEWS/150629957/consumers-demand-price-transparency-but-at-what-cost.
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    As described in section VI, the Departments assume most self-
insured group health plans will work with a TPA to meet the 
requirements of the final rules. The Departments estimated costs in the 
high-range estimate by assuming that all issuers and TPAs (for self-
insured group health plans) will need to develop and build their 
internet-based self-service tool.
    As described in section VI.A.1 of the ICR, the Departments assume 
most self-insured group health plans will work with a TPA to meet the 
requirements of the final rules. The Departments estimated cost in the 
high-end estimate by assuming that all issuers and TPAs (for self-
insured group health plans) will need to develop and build their 
internet-based self-service tools from scratch. However, the 
Departments also provide a low-end estimate by assuming that over 90 
percent of plans, issuers, or TPAs currently provide an internet-based 
self-service tool and will only be required to modify an existing 
internet-based self-service tool which may already meet some (if not 
all) the requirements in the final rules.\251\ The

[[Page 72262]]

Departments recognize that some plans, issuers, or TPAs might also 
voluntarily elect to develop or enhance a mobile application, if one is 
already available or in some stage of planning and implementation, 
which will result in additional costs. Additionally, TPAs generally 
work with multiple self-insured group health plans, and as a result, 
the costs for each TPA and self-insured group health plan may be lower 
to the extent they are able to coordinate their efforts and leverage 
any resulting economies of scale.
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    \251\ Sharma, A., Manning, R., and Mozenter, Z. ``Estimating the 
Burden of the Proposed Transparency in Coverage Rule.'' Bates White 
Economic Consulting. January 22, 2020. Available at: https://www.bateswhite.com/media/publication/183_Estimating%20Burden%20of%20Proposed%20TCR.pdf. In order to 
determine our estimates in determining the low-range cost estimate, 
the Departments estimated that only 90 percent of plans, issuers, 
and TPAs provided an online tool that would meet the assumptions 
used in developing the estimated costs.
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    Moreover, health care data breach statistics show there has been an 
upward trend in data breaches over the past 10 years, with 2019 having 
more reported data breaches than any other year since records first 
started being published. Between 2009 and 2019 there have been 3,054 
health care data breaches involving more than 500 records; resulting in 
the loss, theft, exposure, or impermissible disclosure of 230,954,151 
health care records, equating to more than 69.78 percent of the United 
States population. Health care data breaches are now being reported at 
a rate of more than one per day.\252\ Based on this information, the 
Departments recognize the requirements of the final rules provide 
additional opportunities for health care data breaches. Although 
privacy and security costs have been imbedded into the development and 
implementation cost estimates discussed in the section VI.A.1 and 
further discussed in section II.B.4 of this preamble, the Departments 
expect that plans and issuers will follow existing applicable state and 
Federal laws regarding persons who may or must be allowed to access and 
receive the information. The Departments recognize that some plans and 
issuers may incur additional expenses to ensure a consumers' PHI and 
PII are secure and protected. Additionally, as consumers accessing the 
internet-based self-service tool may be required to input personal data 
to access the consumer-specific pricing information, consumers may be 
exposed to increased risk and experience identity theft as a result of 
breaches and theft of PII. As noted previously in section II.B.4 of 
this preamble, the Departments are finalizing a provision that reminds 
plans and issuers of their duty to comply with requirements under other 
applicable state or Federal laws, including requirements governing the 
accessibility, privacy, or security of information, or those governing 
the ability of properly authorized representatives to access 
participant, beneficiary, or enrollee information held by plans and 
issuers.
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    \252\ ``Healthcare Data Breach Statistics.'' HIPAA Journal. 
Available at: https://www.hipaajournal.com/healthcare-data-breach-statistics/.
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    One commenter stated that since multiemployer plans do not directly 
control the process of negotiations or the resulting information, these 
plans do not have access to the information necessary to satisfy the 
final rules and plans could be subject to significant penalties for 
failure to comply. Another commenter, that surveyed employers who 
sponsor self-insured ERISA-covered plans, noted that respondents would 
likely contract with a TPA to comply with the final rules because 
employers do not have all the necessary data nor the capability to 
collect that data. Employers indicated that contracting with a TPA for 
these requirements would come at a significant compliance cost to them. 
Commenters noted that they rent networks from issuers and contract with 
those issuers as TPAs to administer plan benefits. It is the issuer 
that holds the pricing information for medical services, facilities, 
and providers, not the self-insured employer. Another commenter stated 
that the burden incurred by plans, issuers, and TPAs would be crippling 
for smaller TPAs and health plans, and that burden would ultimately be 
passed along to employers, and, therefore, to consumers. Another 
commenter expressed concern that all of the data aggregation and 
collection required under the regulations--along with the need to 
contract with a third-party developer to create an on-line cost-sharing 
liability service tool that is capable of providing customized cost-
sharing information to a particular participant, beneficiary, or 
enrollee--may be overly costly to plans. The commenter further 
suggested that there may also be significant costs associated with data 
storage.
    The Departments appreciate the comments received in response to the 
proposed rules and recognize that not all plans will be the source of 
the material information required to meet the requirements of the final 
rules, and that many plans will ultimately seek out third-party 
assistance in the development of their internet-based self-service tool 
and machine-readable files, thus avoiding any potential penalties for 
noncompliance. As noted in section II.B.5 of this preamble, 
multiemployer plans may contract with a TPA or other third party (for 
example, a clearinghouse) to meet the requirements under the final 
rules. The Departments note that it is possible that obtaining third-
party assistance to meet the requirements of the final rules could 
result in additional costs. The Departments expect, however, that TPA, 
or other third party, assistance will help alleviate some of the cost 
concerns expressed by commenters as a result of economies of scale. As 
noted above, commenters noted that many self-insured ERISA plans rent 
networks from issuers and contract with issuers as TPAs to administer 
plan benefits. By leveraging their relationships with their issuer-TPA, 
self-funded plans may be able to reduce their overall costs by using 
any tools developed by those issuers. The Departments also recognize 
that in order to meet the requirements of the final rules, some smaller 
TPAs and issuers could face disproportionate increases in costs. 
However, the Departments anticipate that a number of TPAs and issuer-
TPAs will seek to coordinate their efforts and take advantage of any 
resulting economies of scale to reduce their overall costs, and that 
this approach can be leveraged in order to reduce concerns related to 
the development of both the internet-based self-service tool as well as 
the required machine-readable files. The Departments recognize that 
issuers and TPAs will incur potential costs associated with data 
storage and providing access to the internet-based self-service tool. 
These costs can be generally broken down into two sections: Bandwidth 
pricing and disc space. Bandwidth Pricing accounts for the amount of 
traffic going to a site, the size of the information that is 
transferred from the server to the user's browser, and the speed in 
which that happens. Provided that 99 percent of websites do not exceed 
5 gigabytes of bandwidth per month,\253\ this means if an issuer's or 
TPA's self-service tool, hosted on Microsoft's cloud product, would be 
free or minimal if beyond five gigabytes.\254\ Disk Space Pricing 
accounts for the size of the hard drives necessary to host a website. 
Assuming that each issuer or TPA would need an estimated 351 gigabytes 
of storage this would translate to approximately $8 per month. Thus, 
assuming that each issuer or TPA will not require five gigabytes of 
bandwidth for their internet-based self-service tool, the Departments 
are of the

[[Page 72263]]

view that the overall costs to store and provide data through the 
internet-based self-service tool will be minimal. The Departments 
recognize that the final rules will impose significant costs on plans, 
issuers, and TPAs, and that some of these costs may be transferred to 
consumers in the form of higher premiums or changes in the cost-sharing 
structure of plans.
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    \253\ ``How Much Bandwidth and Disk Space Do I Really Need?'' 
Hosting Manual. Available at: https://www.hostingmanual.net/bandwidth-disk-space-need/.
    \254\ ``Bandwidth Pricing Details.'' Microsoft Azure. Available 
at: https://azure.microsoft.com/en-us/pricing/details/bandwidth/.
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Intended Outcomes
    Informed Consumers. Through increased price transparency, consumers 
armed with pricing information will have greater control over their own 
health care spending, which can foster competition among providers, 
resulting in less disparity in health care prices or an overall 
reduction in health care prices. Consumers who use the internet-based 
self-service tool will be able to access their cost-sharing amount paid 
to date; their progress toward meeting their accumulators, such as 
deductibles and out-of-pocket limits; their estimated cost-sharing 
liability for an identified item or service; negotiated rates for in-
network providers for covered items and services, and the out-of-
network allowed amounts for covered items and services. Additionally, 
consumers will know how much health care services will cost for a 
particular treatment-, and, and if applicable, whether coverage of a 
specific item or service is subject to a prerequisite. As discussed 
previously in section II.B.1.a of this preamble, section 2713 of PPACA 
requires group health plans and health insurance issuers to provide 
certain recommended preventive items and services without cost-sharing. 
However, if the same items or services are furnished as non-preventive 
actions or by an out-of-network provider, the participant, beneficiary, 
or enrollee may be subject to the cost-sharing terms of his or her 
plan. If a plan or issuer cannot determine whether the request is for a 
preventive item or service, the plan or issuer must display the non-
preventive cost-sharing liability, along with a note that the item or 
service may not be subject to cost-sharing if it is billed as a 
preventive service. Pricing information also gives consumers the 
ability to plan ahead for any known items and services they may require 
in the near future. The Departments are of the view that access to this 
information is essential to enable consumers to make informed decisions 
regarding specific services or treatments, budget appropriately to pay 
any out-of-pocket expenses, and determine what impact any change in 
providers, items, or services will have on the cost of a particular 
service or treatment.
    Several consumers stated that they want the opportunity to shop for 
the best price when seeking out medical care and expressed that this 
information is critical when deciding whether to proceed with a test or 
procedure. Other consumers expressed the desire to shop for items and 
services and stated that shopping for health care would give them more 
control over their personal health care decisions and spending. Some 
consumers felt strongly that they should be able to compare prices to 
find the best deal for non-life-threatening care. Some other consumers 
also expressed frustration when describing their own experiences of 
trying and failing to obtain pricing information before receiving a 
particular service.
    The Departments agree that providing the information required in 
the final rules will provide consumers with tools and information they 
can use to determine and evaluate the potential costs associated with 
their particular health care needs, thus providing them the opportunity 
to obtain the care they need at a cost they find acceptable.
    Consumers may become more cost conscious. The Departments are of 
the view that with increased price transparency consumers may begin to 
focus more carefully on the costs of services. Currently, consumers may 
be aware they have a coinsurance of 20 percent for an item or service, 
but they may be unaware of what dollar amount they will ultimately be 
responsible for paying. Knowing that dollar amount may motivate 
consumers to seek lower-cost providers and services or seek needed care 
they did not obtain because of uncertainty or concerns about the costs. 
As discussed in sections I.E.3, II.C, and V.B.2-4 in this preamble, 
there has been recent evidence in New Hampshire and Kentucky that 
supports the Departments' view that having access to pricing 
information, along with currently available information on provider 
quality and incentives to shop for lower prices, can result in 
consumers choosing providers with lower costs for items and services, 
thus potentially lowering overall health care costs.\255\ The 
Departments acknowledge that this may only hold true if cost and cost 
sharing varies between services and providers. Depending on the degree 
of cost variation between specific items and services, there could be 
large variations in the degree to which prices change per item or 
service resulting in wide variations in health care costs and 
associated out-of-pocket costs.\256\ Cost sharing in some alternative 
contracting models, such as HMOs and Exclusive Provider Organizations 
(EPO), generally occurs through fixed copayment amounts regardless 
which provider furnishes a covered item or service and, therefore, the 
internet-based self-service tool will provide little incentive for 
consumers to choose less costly providers in this context.
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    \255\ Brown, Z.Y. ``Equilibrium Effects of Health Care Price 
Information.'' 100 Rev. of Econ. and Stat. 1. July 16, 2018. 
Available at: http://www-personal.umich.edu/~zachb/
zbrown_eqm_effects_price_transparency.pdf; see also Rhoads, J. 
``Right to Shop for Public Employees: How health care incentives are 
saving money in Kentucky.'' The Dartmouth Institute for Health 
Policy and Clinical Practice. March 8, 2019. Available at: https://thefga.org/wp-content/uploads/2019/03/RTS-Kentucky-HealthCareIncentivesSavingMoney-DRAFT8.pdf.
    \256\ The evidence cited in this RIA yields per-capita annual 
savings estimates ranging from between $3 and $5 (=$2.8 million + 
$1.3 million + $7.0 million + $2.3 million two-year savings, across 
1.3 million California public employees and their family members, 
per Boynton and Robinson (2015)), to $6.50 (=$7.9 million + $36 
million five-year savings found by Brown (2018), divided across the 
1.36 million residents of New Hampshire), to $17 (=$13.2 million 
three-year savings across 0.26 million beneficiaries, per Rhoads 
(2019)). If these results were extrapolated to the entire U.S. 
population, the estimate of rule-induced reductions in annual 
consumer expenditures could range from $0.98 billion to $5.5 
billion, with the median result across the three studies at $2.1 
billion. This range has a tendency toward overestimation, in that 
effects of the Hospital Price Transparency final rule and existing 
non-Federal transparency programs have not been subtracted off.
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    Timely Payment of Medical Bills. The Departments anticipate that 
consumers with access to the information provided in response to the 
final rules will be more likely to pay their medical bills on time. A 
recent Transunion survey found that 79 percent of respondents said they 
would be more likely to pay their bills in a timely manner if they had 
price estimates before obtaining care.\257\ In addition, a non-profit 
hospital network found that the more information they shared with 
patients, the better prepared those patients were for meeting their 
responsibilities. The hospital network reported that providing price 
estimates to patients resulted in increased point of service cash 
collections from $3 million in 2010 to $6 million in 2011.\258\ 
However, the Departments recognize that consumers may not be aware of 
any potential balance billing charges, where not prohibited by state 
law, and other potential costs associated with their

[[Page 72264]]

health care such as facility fees etc. While these consumers will have 
a better idea of the costs they will incur when obtaining health care, 
they will likely be unaware of any additional charges they could incur 
as a result of obtaining care resulting in higher than expected out-of-
pocket costs. Additionally, consumers may not fully be aware of their 
costs due to potential medical complications that might arise during 
the course of treatment or while obtaining a specific service.
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    \257\ Kutscher, B. ``Report: Consumers demand price 
transparency, but at what cost?'' Modern Healthcare. June 2015. 
Available at: https://www.modernhealthcare.com/article/20150623/NEWS/150629957/consumers-demand-price-transparency-but-at-what-cost.
    \258\ ``Reimagining Patient Access.'' Insurancenewsnet. December 
29, 2015. Available at: https://insurancenewsnet.com/oarticle/reimagining-patient-access#.
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    Increased Competition Among Providers. Studies have found that 
state price transparency regulations have resulted in hospitals 
decreasing their charges and a decrease in mean price and price 
variability for queried procedures. One study found the publication of 
chargemaster data resulted in a decrease in mean price and price 
variability for queried procedures.\259\ However, another study 
attributed the reduction in charges to the ``reputational costs of 
perceived overcharging,'' yet also noted that reductions in charges 
were associated with decreases in discounts leading to no consumer 
savings.\260\ Another issuer-initiated price transparency program, 
designed to encourage the selection of high-value providers, provided 
consumers with price differences among MRI facilities.\261\ Those 
patients provided pricing information saw an 18.7 percent reduction in 
the cost per test and a decrease in the use of hospital-based 
facilities.\262\ The study also found that price variations between 
hospital and non-hospital facilities were reduced by 30 percent.\263\ 
As discussed in sections I.B in this preamble, the Departments 
recognize that requiring hospitals to display payer-specific negotiated 
charges, discounted cash prices, and de-identified minimum and maximum 
negotiated charges for as many of the 70 CMS selected shoppable 
services and additional hospital-selected shoppable services for a 
combined total of at least 300 shoppable services may play a role in 
decreasing mean prices and price variability.\264\ However, the 
Departments are of the view that the Hospital Price Transparency final 
rule does not, in itself, result in reduced prices and price 
variability as the rule does not result in consumers receiving complete 
price estimates for health care items and services from both hospitals 
and issuers. Further, the Hospital Price Transparency final rule does 
not provide price transparency with respect to items and services 
provided by other health care providers. Therefore, the Departments are 
of the view that the requirements of the final rules will provide the 
additional price transparency necessary to empower a more price-
conscious and responsible health care consumer and lead to increased 
competition among providers as consumers will be aware of and have the 
ability to compare the out-of-pocket cost of a covered item or service 
prior to receiving an item or service, which could force higher-cost 
providers to lower their prices in order to compete for the price 
sensitive consumer.
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    \259\ Ward, C., and Reeder, T. ``The Evolution and Impact of 
Hospital Price Transparency in North Carolina.'' North Carolina 
Medical Journal. Volume 81. Issue 2. April 2020. Available at: 
https://www.ncmedicaljournal.com/content/81/2/95.short.
    \260\ Christensen, H.B., Floyd, E., and Maffett, M. ``The Only 
Prescription is Price Transparency: The Effect of Charge-Price-
Transparency Regulation on Healthcare Prices.'' Management Science. 
February 21, 2019. Available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2343367.
    \261\ Wu, S.J., et al. ``Price transparency for MRIs increased 
use of less costly providers and triggered provider competition.'' 
Health Affairs. August 2014. Available at: https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2014.0168.
    \262\ Id.
    \263\ Id.
    \264\ 84 FR 65524 (Nov. 27, 2019).
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3. Requirements for Public Disclosure of In-Network Provider Rates for 
Covered Items and Services, Out-of-Network Allowed Amounts and 
Prescription Drug Pricing Information Through Machine-Readable Files 
Under 26 CFR 54.9815-2715A3, 29 CFR 2590.715-2715A3, and 45 CFR 147.212
Costs
    Under 26 CFR 54.9815-2715A3(b), 29 CFR 2590.715-2715A3(b), and 45 
CFR 147.212(b) of the final rules, group health plans and health 
insurance issuers are required to make available to the public, on an 
internet website, three digital files in a machine-readable format. The 
first file (the In-network Rate File) must include information 
regarding all applicable rates, which may include negotiated rates, 
underlying fee schedules, or derived amounts, to the extent they may be 
used for purposes of determining provider reimbursement or cost-sharing 
for in-network providers. The Departments note that prescription drug 
products may be included in the In-network Rate File only to the extent 
they are included as part of an alternative payment arrangement, such 
as a bundled payment arrangement. The second file (the Allowed Amount 
File) must provide data showing the allowed amounts and billed charges 
with respect to covered items and services, including prescription 
drugs, furnished by out-of-network providers over a 90-day period 
beginning 180 days prior to the publication date of the machine-
readable file. The third file (the Prescription Drug File) must include 
information for negotiated rates and historical net prices for 
prescription drugs, organized by NDC. Plans and issuers are required to 
make the information available in accordance with certain method and 
format requirements described at paragraph (b)(2) and update these 
files monthly as required under paragraph (b)(3). The quantitative 
costs associated with meeting these requirements are detailed in 
section VI.2 of the ICR section.
    Some commenters stated that the requirement to use billing codes 
would be very costly and potentially cost-prohibitive. One commenter 
indicated this is because use of CPT codes, the most commonly used 
billing codes, requires licensure by the American Medical Association 
(AMA). According to the commenter, the AMA charges licensing fees based 
on use cases per user. Another commenter noted that some self-funded 
plans rent networks and do not have real-time access to network 
pricing, and there are fees charged to plans to access the negotiated 
discounts with the provider network the plan has rented. As a result, 
the commenter suggested that plans will have to pay the network access 
fees twice--once the information required under the final rules and a 
second time when the actual claim is received and processed through an 
intermediary--to meet the requirements of the final rules.
    The Departments understand that the use of CPT codes may represent 
an additional cost for some plans and issuers. Generally, the 
Departments anticipate that if a plan or issuer currently has the 
capability or licensure to record CPT codes on EOBs mailed to 
consumers, the plans or issuers should also be able to use that CPT 
code to make the public disclosures required through the final rules 
without, or with minimal, additional costs. The Departments also have 
concluded that, as plans and issuers would already include licensing 
costs for using CPT codes in the cost of doing business, they would not 
incur additional costs to use the CPT codes to populate the machine-
readable files. The Departments acknowledge that some plans and issuers 
could face instances where they could incur additional costs in order 
to access the required CPT or network information based on the 
structure of licensing agreements to which they are currently parties. 
However, due to an overall lack of specific information and knowledge 
associated with the number of plans and issuers that currently have

[[Page 72265]]

such licensing agreements, the structure of those agreements, and the 
alternatives available to those plans and issuers, the Departments are 
unable to accurately estimate any associated costs that might be 
incurred under these circumstances.
    One commenter stated that for many employer-sponsored health plans, 
in-network rates usually belong to a network administrator, not the 
health plan, and, in the event network administrators were to update 
their contractual agreements to permit plans to receive and share 
pricing information, it is likely they will charge fees or request 
financial concessions from plans, which will increase administrative 
burdens on group health plans.
    The Departments understand that requiring release of this pricing 
information will affect certain commercial arrangements and 
expectations that prevail in parts of the health care industry today, 
which could result in certain one-time and ongoing administrative 
costs. However, the Departments are of the view that making this 
information available to consumers and the public will serve consumers' 
long-term interests in facilitating a consumer-oriented, information-
driven, more competitive market. Additionally, as discussed previously 
in section II.C in this preamble, the Departments are finalizing 
several special rules to streamline the provision of the public 
disclosures required through the final rules. These special rules were 
designed to reduce the overall compliance costs of the disclosures 
required by the final rules and to support smaller issuers and plans in 
meeting the requirements of the final rules by permitting certain 
contractual arrangements and the aggregation of allowed amount data in 
some circumstances.
    The Departments also recognize that a certain amount of data 
storage will be required to post the machine-readable files on a 
publicly available internet website. Through the efficiencies of cloud 
computing and data storage, the cost to host large files dramatically 
decreased in price in the past several years. Popular services such as 
Simple Storage Service from Amazon Web Services and Standard Storage 
from the Google Cloud Platform can host files for roughly $0.026 per 
gigabyte. The Departments' size estimates of roughly 5 gigabytes for 
each machine-readable file would incur a monthly data storage cost of 
approximately $0.39 for all of the machine-readable files.
    Non-Quantified Costs for Public Disclosure of In-Network Rates. In 
addition to the costs described in section VI.A.2, the Departments 
recognize there may be other costs associated with the requirement to 
make in-network rates publicly available that are difficult to quantify 
given the current lack of information and data. While the Departments 
are of the view that the overall effect of the final rules will be to 
provide greater price transparency and potentially lower health care 
prices, there are instances in very transparent markets where price 
ranges can narrow and average costs can increase as a result of price 
transparency.\265\ The Departments also recognize that plans and 
issuers may experience ongoing additional costs (for example, the cost 
of quality control reviews) to ensure they comply with the requirements 
of the final rules. In addition, the Departments are aware that 
information disclosures allowing competitors to determine the rates 
their competitors are charging may dampen each competitor's incentive 
to offer a lower price or result in a higher price equilibrium.\266\ 
While plans and issuers with the highest in-network rates may see a 
decrease in their in-network rates, as their providers respond to 
consumer and smaller issuers' concerns regarding paying more for the 
same item and service, plans and issuers with the lowest in-network 
rates may see their lower cost providers adjust their rates upward. 
However, most research suggests that when better price information is 
available, prices for goods sold to consumers fall. For example, in an 
advertising-related study, researchers found that the act of 
advertising the price of a good or service is associated with lower 
prices.\267\
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    \265\ Kutscher, B. ``Report: Consumers demand price 
transparency, but at what cost?'' Modern Healthcare. June 2015. 
Available at: https://www.modernhealthcare.com/article/20150623/NEWS/150629957/consumers-demand-price-transparency-but-at-what-cost.
    \266\ Koslov, T., and Jex, E. ``Price transparency or TMI?'' 
United States, Federal Trade Commission. Available at: https://www.ftc.gov/news-events/blogs/competition-matters/2015/07/price-transparency-or-tmi.
    \267\ Austin, D. A, and Gravelle, J. G. ``Does Price 
Transparency Improve Market Efficiency? Implications of Empirical 
Evidence in Other Markets for the Health Sector.'' Congressional 
Research Service. June 2007. Available at: https://fas.org/sgp/crs/secrecy/RL34101.pdf.
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    A potential additional non-quantified cost could be the cost to 
remove gag clauses from contracts between plans, issuers, and 
providers. Contracts between plans, issuers, and providers often 
include a gag clause, which prevents plans and issuers from disclosing 
in-network rates. The Departments recognize that plans, issuers and 
providers may incur a one-time expense for their attorneys to review 
and update their provider contracts to remove any relevant gag clauses. 
Comments received regarding gag clauses and contract negotiations are 
further discussed in section VI.A.2 later in this preamble.
    Another potential cost concerns the final rules' impact on a plan's 
or issuer's ability or incentive to establish a robust network of 
providers. A health insurance provider network is a group of providers 
that have contracted with a plan or issuer to provide care at a 
specified price the provider must accept as payment in full. Many 
times, plans and issuers want consumers to use the providers in their 
network because these providers have met the plan's or issuer's quality 
standards and agreed to accept an in-network rate for their services in 
exchange for the patient volume they will receive by being part of the 
plan's or issuer's network.\268\ Some plans and issuers offer a narrow 
network: These networks operate with a smaller number of providers, 
meaning a consumer will have fewer choices when it comes to in-network 
providers, but often offer lower monthly premiums and out-of-pocket 
costs.\269\ The Departments recognize that making in-network rates 
public may create a disincentive for plans and issuers to establish a 
contractual relationship with a provider (including in narrow networks) 
because providers may be unwilling to give a discount to plans and 
issuers when that discount will be made public. As addressed further in 
section VI.C later in this preamble, the requirements of the final 
rules could result in a reduction in revenue for those smaller plans 
and issuers that are unable to pay higher rates to providers and may 
require them to narrow their provider networks, which could affect 
access to care for some consumers. Due to smaller plans' and issuers' 
potential inability to pay providers with higher rates, smaller plans 
and issuers may further narrow their networks to include only providers 
with lower rates, possibly making it more difficult for smaller plans 
and issuers to fully comply with network adequacy standards described 
at 45 CFR 156.230 or other applicable state network adequacy 
requirements.
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    \268\ Davis, E. ``Health Insurance Provider Network Overview.'' 
Verywell Health. August 2019. Available at: https://www.verywellhealth.com/health-insurance-provider-network-1738750.
    \269\ Anderman, T. ``What to Know About Narrow Network Health 
Insurance Plans.'' Consumer Reports. November 23, 2018. Available 
at: https://www.consumerreports.org/health-insurance/what-to-know-about-narrow-network-health-insurance-plans/.
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    Some commenters stated that public disclosure of in-network rates 
could affect the sustainability and affordability

[[Page 72266]]

of QHPs offered through the Exchanges by placing upward pressure on 
rates and by placing provider participation in networks at risk. One 
commenter stated that the potential negative effects on QHPs would 
especially harm unsubsidized consumers and consumers in rural areas 
where provider consolidation is most common and could impact overall 
marketplace stability and the risk pool. Furthermore, commenters 
asserted that increased premiums for QHPs could result in increased 
Federal spending in the form of higher premium tax credit (PTC) 
payments, which could substantially increase the Federal deficit over 
10 years. One commenter stated that the Departments should not finalize 
the release of in-network rates until they fully evaluate the impact on 
affordable plan options on the Exchanges and the effects on Federal 
spending.
    As discussed later in section V.B.5 of this preamble, the 
Departments estimate premiums for the fully-insured markets will be 
$471 billion for 2022, including the individual, small group, and large 
group markets. The Departments estimate that the cost for 2022 
represents approximately 2.4 percent of projected commercial insured 
premiums for the fully-insured market, 1.4 percent in 2023, 0.5 percent 
in 2024, and 0.5 percent in 2025. Assuming this level of premium 
increase in the individual market, PTC outlays are estimated to 
increase by about $1,047 million in 2022, $623 million in 2023, $216 
million in 2024, and $218 million in 2025. Given that the 2021 
President's Budget estimates that PTC outlays are expected to be $43.8 
billion in 2022, $44.8 billion in 2023, $45.875 billion in 2024, and 
$48.2 billion in 2025,\270\ the Departments expect the estimated 
increase of $1,047 million in 2022, $623 million in 2023, $216 million 
in 2024, and $218 million in 2025 to have minimal impacts on 
anticipated enrollment and are not of the view that this increase will 
result in any widespread negative effects on market stability. 
Additionally, the Departments have determined that enrollment impacts 
will be minimal, as estimated premium impacts are relatively small, and 
rate increases for subsidized enrollees in the individual market will 
be largely mitigated. Additionally, participants, beneficiaries, and 
enrollees currently make health insurance coverage decisions based on 
their particular health and financial situations, and it is not 
predictable how information provided as a result of the final rules 
will significantly impact those health insurance coverage decisions. 
Thus, the Departments do not expect the final rules to significantly 
increase the selection risk beyond the levels that currently exist. The 
Departments do acknowledge that the estimated increases in premiums 
could result in minor harm to unsubsidized consumers as they could be 
faced with increased premiums that would not be negated by any 
increases in PTC and this could impact those consumers' decisions 
related to obtaining health insurance coverage.
---------------------------------------------------------------------------

    \270\ OMB 2021 President's Budget. Available at: https://www.whitehouse.gov/wp-content/uploads/2020/02/budget_fy21.pdf.
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    The Departments received several comments from issuers, providers, 
and employers stating that the requirement to publicly disclose in-
network rates would threaten the viability of their business models or 
business models upon which they rely. One commenter stated that the 
proposal to release in-network rates could affect the viability of 
individual and small group market health plans sold by small issuers. 
The commenter further suggested that ``safety net'' health plans (which 
serve individuals and families that do not have access to other sources 
of coverage in markets that other issuers find unprofitable) currently 
may be able to access more favorable contract terms with providers, and 
these types of arrangements would be at risk if the in-network rate 
information were required to be made public. The commenter expressed 
particular concern that exposure of the rates of safety net hospitals 
may uniquely disadvantage them in negotiations with plans and issuers 
because they may have to raise rates on certain services to support 
safety net activities. Similarly, a hospital system stated that 
publishing in-network rates would negatively impact its ability to 
contain costs and threaten its current participation in the networks of 
nearly all area health plans. Another commenter indicated that 
providers would leave plans' and issuers' networks if plans' and 
issuers' attempts to achieve more favorable rates using public in-
network rate information proved unsuccessful. Another commenter argued 
that the policy requiring disclosure of in-network rates could also 
result in the collapse of the network administrator business model, 
which would result in significantly increased administrative costs for 
health plans that would need to contract separately with each 
participating provider.
    The Departments understand that requiring the release of this 
pricing information will upset certain commercial arrangements and 
expectations that prevail in parts of the health care industry today, 
which could result in certain one-time and ongoing administrative 
costs. However, the Departments have concluded that providing increased 
price transparency and making this information available to the public 
will serve the public's long-term interests in facilitating a consumer-
oriented, information-driven, more competitive market potentially 
leading to reduced overall health care costs.
    Some commenters suggested that, by using publicized in-network rate 
information, plans and issuers could also coordinate to reduce provider 
payment levels below market competitive rates, a so-called ``race to 
the bottom.'' Some of these commenters stated that this ``race to the 
bottom'' could also potentially hurt access to, and quality of, care. 
For example, one commenter stated that if provider reimbursement rates 
were set too low, patient access to care would be negatively impacted 
because providers will not have the resources to invest in technology, 
training, and equipment.
    One commenter suggested that plans and issuers would likely want to 
re-negotiate rates once they learn local prices and that dominant 
issuers could use payer specific in-network rate information to deter 
and punish hospitals that lower their rates or enter into value-based 
arrangements with the dominant issuer's competitors.
    Several commenters stated that required disclosure of in-network 
rates could result in an increase in health care prices. Others 
specifically expressed concerns that making payer-specific in-network 
rates available would disrupt contract negotiations between providers 
and health plans and result in providers changing their rates in 
anticompetitive ways (``race to the top'') and could promote an 
environment that could support collusion between providers, resulting 
in increased prices. Other commenters suggested that required 
disclosures would lead to the consolidation of providers and even 
greater consolidation in the commercial health insurance industry, and 
expressed concerns that disclosures could particularly harm small 
health plans and TPAs who may have been able to get discounted rates by 
offering health plans in a limited service area.
    One commenter noted that other states' transparency systems used 
several distinguishable features to mitigate the risks of publicizing 
rates, but noted that, despite these efforts, the data was still used 
in contract negotiations.

[[Page 72267]]

    The Departments recognize that there is the potential for adverse 
market outcomes as a result of the final rules. As noted previously, 
the Departments are aware of the potential that plans and issuers could 
seek to use the public availability of in-network rates or underlying 
fee schedules in attempts to lower prices in what certain commenters 
called a ``race to the bottom.'' As noted previously in this section, 
the Departments recognize the potential for anticompetitive behaviors 
and increased consolidation that may occur should providers use the in-
network rate or fee schedule data to increase their rates or should 
smaller plans and issuers struggle to comply. The Departments recognize 
that provider collusion could result in increased prices, and also 
recognize that this sort of behavior could result in distinct coverage 
areas or agreements where providers choose not to compete for 
consumers. As discussed previously in this preamble, the Departments 
nonetheless have concluded that providing increased price transparency 
and making this information available to the public will serve the 
public's long-term interests in facilitating a consumer-oriented, 
information-driven, more competitive health care market.\271\ Should 
the market become more competitive, as the Departments anticipate, the 
reduction in prices may provide more options for those providers that 
function as ``safety-net providers'' to expand their networks or 
enhance the services they currently provide by organizing and 
delivering a significant level of health care and other related 
services to uninsured, Medicaid, and other vulnerable populations. The 
Departments also reason that the likelihood of price and other forms of 
collusion will be mitigated to some extent by the actions of state and 
Federal regulatory and antitrust enforcement authorities and the 
enforcement of current market laws and regulations. The Departments are 
of the view that enforcement actions taken to reduce the likelihood of 
price collusion will further reduce the chances that issuers will seek 
to reduce the size of their networks.
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    \271\ Gudiksen K.L., Chang, S.M., and King, J.S. ``The Secret of 
Health Care Prices: Why Transparency Is in the Public Interest.'' 
California Health Care Foundation. July 2019. Available at: https://www.chcf.org/wp-content/uploads/2019/06/SecretHealthCarePrices.pdf.
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    Although consumer education is not a requirement of the final 
rules, plans, issuers and TPAs may face additional costs if they chose 
to inform and educate their consumers about the options available to 
them, how to use these tools, increase their general health care 
knowledge. Providing educational opportunities to participants, 
beneficiaries, or enrollees could encourage those participants, 
beneficiaries, or enrollees to seek lower cost services, providing 
plans, issuers and TPAs the potential to realize a return on the 
investments incurred to comply with the final rules.
    Non-Quantified Cost for Public Disclosure of out-of-network allowed 
amounts. In addition to the costs described in section VI.A.2 and the 
previous analysis related to the public disclosure of in-network rates, 
the Departments recognize that there may be other costs associated with 
the requirement to make historical payments of out-of-network allowed 
amounts and billed charges publicly available that are difficult to 
quantify, given the current lack of information and data.
    Furthermore, while plans and issuers must de-identify data (such as 
claim payment information for a single provider) and ensure certain 
sensitive data are adequately protected, unauthorized disclosures of 
PHI and PII may increase as a result of manual preparation and 
manipulation of the required data. The potential disclosures of PHI and 
PII may require plans, issuers, and TPAs to obtain additional cyber-
security insurance that could lead to additional costs.
    Non-Quantified Cost for Public Disclosure of Prescription Drug 
Pricing Information. In addition to the costs described in section 
VI.A.2 and the previous analysis related to the public disclosure of 
in-network rates and allowed amounts, the Departments recognize that 
there are other costs associated with the requirement to make 
negotiated rates and historical net prices for prescription drugs 
publicly available that are difficult to quantify, given the current 
lack of information and data. For example, as a result of the 
availability of consolidated negotiated rates and historical net 
prices, drug manufacturers may seek to restructure their rebate and 
discount programs and could potentially cease providing rebates to 
plans and issuers, PBMs, or pharmacies, which could then result in less 
savings being passed on to consumers.
Intended Outcomes
    The Departments are of the view that providing greater price 
transparency by requiring group health plans and health insurance 
issuers to make information regarding all applicable rates publicly 
available, which may include negotiated rates, amounts in underlying 
fee schedules, or derived amounts for in-network provider rates; 90-
days of historical allowed amount and billed charges data for out-of-
network providers; and prescription drug negotiated rates and 
historical net prices will ultimately benefit plans and issuers, 
regulatory authorities, consumers, and the overall health care market.
    Group Health Plans and Health Insurance Issuers. Plans and issuers 
may benefit from these requirements because under the final rules a 
plan or issuer would have a better understanding of other plans' or 
issuers' in-network rates. This may allow plans and issuers paying 
higher rates for the same items or services to negotiate with certain 
providers to lower their rates, thereby lowering provider reimbursement 
rates, reducing price variation, and potentially resulting in an 
overall decrease in health care costs. The Departments acknowledge, 
however, as noted in the ``costs'' section (V.B.3) earlier in this 
preamble, that knowledge of other providers' in-network rates could 
also drive up rates if a provider discovers they are currently being 
paid less than other providers by a plan or issuer and, therefore, seek 
to negotiates higher rates.
    In addition, the final rules may result in more plans and issuers 
using a reference pricing structure. Under this structure, 
participants, beneficiaries, or enrollees who select a provider 
charging above the reference price (or contribution limit) must pay the 
entire difference and these differences do not typically count toward 
that individual's deductible or out-of-pocket limit. Plans and issuers 
may want to use a reference pricing structure to pass on any potential 
additional costs associated with what they can identify as higher-cost 
providers to the participant, beneficiary, or enrollee. The Departments 
recognize that reference pricing might not impact every consumer. For 
example, the California Public Employees' Retirement System (CalPERS) 
provides exceptions from reference pricing when a member lives more 
than 50 miles from a facility that offers the service below the price 
limit. It also exempts the patient if the patient's physician gives a 
clinical justification for using a high-priced facility or hospital 
setting. Another example is a business with a self-insured group health 
plan that exempts laboratory tests for patients with a diagnosis of 
cancer from its reference pricing program. However, reference pricing 
has generally been shown to result in price reductions, as opposed to 
mere slowdowns in the rate of price

[[Page 72268]]

growth. For example, in the first two years after implementation, 
reference pricing saved CalPERS $2.8 million for joint replacement 
surgery, $1.3 million for cataract surgery, $7.0 million for 
colonoscopy, and $2.3 million for arthroscopy.\272\
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    \272\ Boynton, A., and Robinson, J. ``Appropriate Use of 
Reference Pricing Can Increase Value.'' Health Affairs Blog. July 7, 
2015. Available at: https://www.healthaffairs.org/do/10.1377/hblog20150707.049155/full/.
---------------------------------------------------------------------------

    Regulatory Authorities. In many states, issuers must obtain prior 
approval for rate changes from the state's DOI. Regulatory authorities 
such as state DOIs might benefit from the final rules because knowledge 
of provider in-network rates and out-of-network allowed amounts paid to 
out-of-network providers could support determinations of whether 
premium rates, including requests for premium rate increases, are 
reasonable and justifiable.
    Consumers. Access to the in-network rates between plans and issuers 
and in-network providers, the amount plans and issuers have paid to 
out-of-network providers, and prescription drug pricing information 
will allow consumers to understand the impact of their choice of health 
insurance coverage option and their choices of providers on the cost of 
a particular service, item, or treatment. Giving consumers access to 
this information as part of their health care decision-making process 
may facilitate a greater degree of control over their own health care 
costs. Furthermore, having access to publicly available out-of-network 
allowed amounts will provide consumers who are shopping for health 
insurance coverage the ability to compare the different rates plans and 
issuers ultimately pay for items and services, including items and 
services from providers that might be out-of-network. While the 
Departments are of the view that consumers will benefit from the final 
rules, the Departments recognize that utilizing the required 
information will not be practical or reasonable in an emergency 
situation. Similarly, some consumers may need assistance in 
understanding complex terms or other associated mechanisms in order to 
utilize this information.
    The Departments recognize that beneficiaries and enrollees in state 
and Federal health care programs (including Medicare, Medicaid, CHIP, 
Basic Health Program and coverage provided by the Department of Defense 
and Veterans Administration) will be impacted by spillover effects 
related to any reductions or increase in prices for individual items 
and services and prescription drugs as a result of the final rules. For 
example, Medicare Part B has historically reimbursed physicians for 
physician-administered drugs using a formula that is based off the 
average sales price (ASP). To the extent the final rules drive changes 
in prescription drug prices, that will change the Federal reimbursement 
rates under Medicare Part B and may impact Medicare beneficiaries' out-
of-pocket costs for their prescriptions. In addition, by law, Medicaid 
programs in every state receive the lowest negotiated rate for 
prescription drugs. To the extent the final rules drive changes in 
prescription drug prices, this will impact the amount all states, the 
Federal Government, and some beneficiaries pay for prescription drugs. 
Similarly, if providers start increasing (or decreasing) their in-
network rates, there could also be spillover effects for Medicare 
Advantage or Medicaid Managed Care Organizations (MCO), particularly 
for issuers and plans that use the same network for both private plans, 
Medicare Advantage Plans and Medicaid MCOs. These changes will impact 
the amount the Federal Government, states, and beneficiaries will need 
to pay for their Medicare and/or Medicaid.
    Overall Health Insurance Market. The price transparency required by 
the final rules may also induce an uninsured person to obtain health 
insurance coverage. Depending on premium rates, an uninsured individual 
might select health insurance coverage after learning the actual dollar 
difference between the usual and customary rates that he or she pays 
for items and services and the in-network rates and out-of-network 
allowed amounts under the terms of a plan or issuer's policy. In 
addition, the final rules might force providers to lower their rates 
for certain items and services in order to compete for the price 
sensitive consumer, plan, or issuer. Although the immediate payment 
impact would be categorized as a transfer, any accompanying health and 
longevity improvements would be considered benefits (and any 
accompanying increases in utilization would, thus, be considered 
additional costs). As discussed in section V.B in this preamble, a 
study of New Hampshire's HealthCost initiative found that the 
availability of pricing information resulted in a five percent 
reduction in costs for medical imaging procedures. The study further 
found that patients saved approximately $7.5 million dollars on X-Ray, 
CT, and MRI scans over the five-year study period (dollars are stated 
in 2010 dollars).\273\
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    \273\ Brown, Z.Y. ``Equilibrium Effects of Health Care Price 
Information.'' 100 Rev. Econ. & Stat. 1. (2018). Available at: 
http://www-personal.umich.edu/~zachb/
zbrown_eqm_effects_price_transparency.pdf.
---------------------------------------------------------------------------

    Some commenters suggested that the biggest impact on health care 
spending and costs would come from self-insured employers who would now 
be able to access and use in-network rate data to negotiate lower rates 
on behalf of plan participants; improve their provider networks; make 
more informed decisions about plan offerings; help steer enrollees to 
higher-quality, lower-cost providers; and more meaningfully implement 
value-based payment designs. Other commenters stated that the proposed 
rules would help create more efficient and value-based health care 
systems by encouraging issuers to design innovative benefit designs 
that push patients toward lower-cost care. Another commenter stated 
that requiring plans and issuers to share publicly their in-network 
rates and the allowed amounts paid to out-of-network providers had the 
potential to increase competition among plans and issuers.
    The Departments are of the view that the requirements in the final 
rules will provide providers, plans, and issuers the ability to provide 
quality health care services at lower costs to participants, 
beneficiaries, or enrollees through enhanced provider and payer 
competition.
4. Medical Loss Ratio (45 CFR 158.221)
    ``Shared savings'' programs allow issuers to share with enrollees 
any savings that result from enrollees shopping for, and receiving care 
from, lower-cost, higher-value providers. In the final rules, HHS is 
amending 45 CFR 158.221(b) to allow health insurance issuers that elect 
to offer ``shared savings'' programs to take credit for such ``shared 
savings'' payments in their MLR calculations. For this impact estimate, 
HHS is assuming that only relatively large issuers (with at least 
28,000 enrollees) that have consistently reported investment costs in 
health IT on the MLR Annual Reporting Form of at least $10.50 per 
enrollee, which represents issuers with 70 percent of total reported 
commercial market health IT investment or issuers that operate in 
states that currently or may soon support ``shared savings'' plan 
designs,\274\ will initially choose to offer plan designs with a 
``shared savings''

[[Page 72269]]

component. HHS assumes that such issuers will share, on average, 50 
percent of the savings with enrollees (which will increase the MLR 
numerator under the final rules), and that issuers whose MLRs were 
previously below the applicable MLR standards will use their retained 
portion of the savings to lower enrollees' premiums in future years 
(which will reduce the MLR denominator). Based on 2017-2019 MLR data, 
HHS estimates that this will reduce MLR rebate payments from issuers to 
enrollees by approximately $120 million per year, while facilitating 
savings that will result from lower medical costs of approximately $154 
million per year for issuers and enrollees (some of which will be 
retained by issuers, shared directly with enrollees, or used by issuers 
to reduce future premium rates).
---------------------------------------------------------------------------

    \274\ The states that supported ``shared savings'' plan designs 
at the time the estimate was developed and therefore were included 
in the estimate are Maine, Massachusetts, New Hampshire, and Utah.
---------------------------------------------------------------------------

5. Summary of Estimated Transfers
    The Departments are assuming that because 2021 premium rates are 
nearly finalized, health insurance issuers will not be able to charge 
for the expenses incurred to implement the requirements of the final 
rules in their 2021 rates. Because issuers will not have the 
opportunity to reflect the 2021 development costs in the 2021 premium 
rates, some issuers may apply margin to the ongoing expenses as they 
develop premium rates for 2022 and after. The Departments estimate 
premiums for the fully-insured markets will be $471 billion for 2022, 
$494 billion in 2023, $516 billion in 2024, and $539 billion in 2025, 
which includes the individual, small group, and large group 
markets.\275\ The Departments estimate that the ongoing expense 
represents approximately 2.4 percent of projected commercial insured 
premiums for the fully-insured market in 2022, 1.4 percent in 2023, and 
0.5 percent in 2024 and 2025 (an average of 1.2 percent per year). 
Assuming this level of premium increase in the individual market, PTC 
outlays are estimated to increase by about $1,047 million in 2022, $623 
million in 2023, $216 million in 2024, and $218 million in 2025. Given 
that 2022 PTC outlays are expected to be $44 billion,\276\ the 
Departments expect that the estimated premium impacts will be 
relatively small, and rate increases for subsidized enrollees in the 
individual market will largely be mitigated. Therefore, the Departments 
expect enrollment impacts to be minimal. The Departments note that any 
impact of the final rules on provider prices has not been estimated as 
limited evidence has generally shown no predictable impact on provider 
prices. As a result, the Departments are assuming that the overall 
impact will be minimal. However, there is a large degree of uncertainty 
regarding the effect on prices, so actual experience could differ.
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    \275\ 2017 earned premium data was taken from amounts reported 
for MLR, and trended forward using overall Private Health Insurance 
trend rates from the NHE projections.
    \276\ OMB 2021 President's Budget. Available at: https://www.whitehouse.gov/wp-content/uploads/2020/02/budget_fy21.pdf.
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    The Departments received comments stating that the broader impact 
to premiums was not considered in the proposed rules. Several 
commenters stated that increased health care prices could be passed 
along to consumers, patients, and taxpayers in the form of higher 
premiums. Some commenters specifically observed that the cost of 
developing and maintaining the required machine-readable files on a 
monthly basis would likely be passed on to consumers in the form of 
higher premiums. Another commenter noted that employers, TPAs, and 
issuers might incur increased costs relative to the rules regarding 
potential data breaches, increased liability, and cyber-coverage costs 
(liability insurance designed to cover financial losses that result 
from data breaches and other cyber events) that could also impact plan 
premiums.
    Other commenters suggested that use of information in the In-
network Rate File could be used by consumers to engage in practices 
that would lead to adverse selection and potentially higher premiums. 
One commenter asserted that the proposed rules would allow individuals 
to enter the insurance pool for specific costly treatments or 
procedures and then drop coverage or switch coverage at the end of the 
contract year for a plan with lower premiums, which would result in 
higher premiums for all consumers because there is no ability for 
health plans to spread the risk across a reliable and long-term 
customer base.
    By contrast, one commenter observed that premium increases could be 
mitigated if low-deductible participants, beneficiaries, or enrollees 
were given information about the cost of the health care they utilize, 
and that over time price transparency could create lower health care 
costs.
    The Departments recognize that many issuers and TPAs will likely 
transfer the costs associated with meeting the requirements in the 
final rules to consumers in the form of increased premiums. However, 
the Departments do not currently have enough information or evidence to 
determine the overall effects the final rules will have on premiums and 
therefore have not estimated how the final rules will impact an 
individual's premium. The Departments also note that adverse selection 
risk currently exists in the individual market; individuals already 
make health care coverage decisions based on their particular health 
and financial situations. It is not clear how the price information 
contained in the In-network Rate, Allowed Amount, and Prescription Drug 
Files will significantly impact an individual's health care coverage 
decisions. The Departments do not expect the final rules to 
significantly increase the selection risk beyond the levels that 
currently exist.
    Also, it is questionable how much the final rules will lower health 
care costs for low deductible participants, beneficiaries, or enrollees 
because cost-sharing amounts are usually much less than the cost of the 
services, so that the participants, beneficiaries, or enrollee have no 
economic incentive to seek lower cost services. Additionally, evidence 
is limited but generally does not show significant differences in 
insured participant, beneficiary, or enrollee behavior as a result of 
price transparency.

C. Regulatory Review Costs

    Affected entities will need to understand the requirements of the 
final rules before they can comply. Group health plans and health 
insurance issuers are responsible for ensuring compliance with the 
final rules. However, as assumed elsewhere, it is expected that issuers 
and TPAs (for self-insured group health plans) will incur this cost and 
burden for most group health plans, and only the largest self-insured 
plans may incur this cost and burden directly. Thus, issuers and TPAs 
(and possibly some of the largest self-insured plans) will be 
responsible for providing plans with compliant services. The 
Departments are currently not aware of any specific number of large 
self-insured plans that will seek to meet the requirements of the final 
rules without third-party assistance and are thus unable to accurately 
account for those plans, however, those plans will incur similar costs 
and burdens as TPAs and issuers in order to develop the required tools 
and to review and understand the final rules. Therefore, the cost and 
burden for the regulatory review is estimated to be incurred by the 
1,959 issuers and TPAs. The Departments also are of the view that each 
state DOI, 50 states plus the District of Columbia, will need to review 
and understand the final rules in order to be able to provide the 
appropriate level of oversight and enforcement.

[[Page 72270]]

    If regulations impose administrative costs on private entities, 
such as the time needed to read and interpret the final rules, the 
Departments should estimate the cost associated with regulatory review. 
Due to the uncertainty involved with accurately quantifying the number 
of entities that will review and interpret the final rules, the 
Departments are assuming that the total number of issuers, TPAs, and 
state DOIs will be required to comply with the final rules.
    Nonetheless, the Departments acknowledge that this assumption may 
understate or overstate the costs of reviewing the final rules. It is 
possible that not all affected entities will review the final rules in 
detail, and some entities may seek the assistance of outside counsel to 
read and interpret them. For these reasons, the Departments are of the 
view that the number of issuers, TPAs, and DOIs would be a fair 
estimate of the number of reviewers of the final rules.
    Using the wage information from the Bureau of Labor Statistics 
(BLS) \277\ for a Computer and Information Systems Manager (Code 11-
3021), a Lawyer (Code 23-1011) and a state Compliance Officer (Code 13-
1041).\278\ The Departments estimate that the cost for each issuer or 
TPA to review the final rules will be $285.66 per hour, including 
overhead and fringe benefits, and each state DOI will incur a cost of 
approximately $55.58 per hour.\279\ Assuming an average reading speed, 
the Departments estimate that it will take approximately two hours for 
each staff member to review and interpret the final rules; therefore, 
the Departments estimate that the cost of reviewing and interpreting 
the final rules for each issuer and TPA will be approximately $571.32 
and $111.16 for each state DOI, including the District of Columbia. 
Thus, the Departments estimate that the overall cost for the estimated 
1,959 issuers and TPAs and each state DOI will be $1,124,885.04 
(($571.32 x 1,959 (total number of estimated issuers and TPAs)) + 
($111.16 x 51 (total number of DOIs))).
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    \277\ Wage information available at https://www.bls.gov/oes/current/oes_nat.htm.
    \278\ Wages obtained for State Government, excluding schools and 
hospitals at https://www.bls.gov/oes/current/naics4_999200.htm.
    \279\ Adjusted hourly wages are determined by multiplying the 
mean hourly rate by 100 percent to account for fringe benefits and 
overhead costs.
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D. Regulatory Alternatives Considered

    In developing the policies contained in the final rules, the 
Departments considered alternatives to the final rules. In the 
following paragraphs, the Departments discuss the key regulatory 
alternatives the Departments considered.
1. Limiting Cost-Sharing Disclosures to Certain Covered Items and 
Services, and Certain Types of Group Health Plans and Health Insurance 
Issuers
    The final rules require group health plans and health insurance 
issuers to disclose cost-sharing information for any requested covered 
item or service. The Departments considered limiting the number of 
items or services for which plans and issuers would be required to 
provide cost-sharing information to lessen the costs on these entities. 
However, limiting disclosures to a specified set of items and services 
reduces the breadth and availability of useful cost estimates to 
determine anticipated cost-sharing liability and limits the impact of 
price transparency efforts by reducing the incentives to lower prices 
and provide higher-quality care. The Departments assumed that plans (or 
TPAs on their behalf) and issuers, whether for a limited set of covered 
items and services or for all covered items and services, would be 
deriving these data from the same data source. Because the data source 
would be the same, the Departments assumed that any additional costs to 
produce the information required for all covered items and services, as 
opposed to a limited set of covered items and services, would be 
minimal. The Departments are of the view that this limited additional 
cost is outweighed by the potentially large benefit to consumers of 
having access to the required pricing information for the full scope of 
items and services covered by their plan or issuer. For these reasons, 
in order to allow consumers to estimate their out-of-pocket costs for 
all services and items covered under their plan or coverage, and to 
achieve lower health care costs and reduce spending through increased 
price transparency, the final rules are requiring cost-sharing 
information be disclosed for all covered items and services. However, 
in recognition of commenters' concerns regarding the implementation 
timetable for the internet-based self-service tool, the final rules 
include a staggered implementation schedule for the disclosure of cost-
sharing information through the internet-based self-service tool.
    The Departments also considered implementing a more limited 
approach by imposing requirements only on individual market plans and 
fully-insured group coverage. However, the Departments are concerned 
that this limited approach might encourage plans to simply shift costs 
to sectors of the market where these requirements would not apply and 
where consumers would have less access to pricing information. The 
Departments are of the view that all consumers should be able to access 
the benefits of greater price transparency and that a broader approach 
will have the greatest likelihood of controlling the cost of health 
care industry-wide. Indeed, if the requirements of the final rules were 
limited to only individual market plans, the Departments estimate only 
9,716,000 individuals would receive the intended benefits of the final 
rules. In contrast, under the final rules, a total of 212,314,000 
participants, beneficiaries, and enrollees may receive the intended 
benefits.\280\ The Departments acknowledge that limiting applicability 
of the requirements of the final rules to the individual market would 
likely reduce the overall cost estimates identified in section V.B.2, 
but the overall cost estimates per covered life would likely increase. 
Further, there is a great deal of overlap in issuers that offer 
coverage in both the individual and group markets. Issuers offering 
coverage in both markets would be required to comply with the 
requirements of the final rules even if the Department limited the 
applicability to only the individual market. Because TPAs provide 
administrative functionality for self-insured group health insurance 
coverage, those non-issuer TPA entities would not incur any costs 
because they do not have any overlap between the individual and group 
markets. The Departments are of the view that the benefits of providing 
consumer pricing information to an estimated total 212,314,000 
participants, beneficiaries, and enrollees outweigh the increased costs 
that a subset of plans, issuers, and TPAs, that are not active 
participants in the individual market, would incur. The Departments 
have determined that the benefits of the final rules being widely 
applicable will not only provide access to health care pricing 
information to a greater number of individuals, but that any developed 
economies of scale will have a much

[[Page 72271]]

greater likelihood of achieving the goal of controlling the cost of 
health care industry-wide.
---------------------------------------------------------------------------

    \280\ ``Health Insurance Coverage in the United States: 2019'' 
(Appendix A). United States Census Bureau/September 15, 2020. 
Available at: https://www2.census.gov/programs-surveys/demo/tables/p60/271/table1.pdf. The number of covered individuals in the 
individual market and the total number of covered individuals have 
been updated from those estimated in the proposed rule. The numbers 
provided in this final rule are based on more recent data and more 
accurately reflect the number of covered individuals in the private 
market (excluding those enrolled in Tricare coverage). The data 
provided is for 2019, whereas the data presented in the proposed 
rule was derived from multiple sources for multiple years (2016 and 
2019).
---------------------------------------------------------------------------

    As noted in section I.B of this preamble, in the summer and fall of 
2018, HHS hosted listening sessions in which attendees stated that 
existing tools usually use historical claims data, which results in 
broad, sometimes regional, estimates, rather than accurate and 
individualized prices. The Departments considered allowing plans and 
issuers to use rate information from historical claims data to 
calculate price estimates. The Departments recognize that many plans 
and issuers use historical claims data to inform and determine cost-
sharing estimates, but the Departments are of the view that using 
pricing information such as negotiated rates will provide for a more 
accurate and reliable estimate. Providing more accurate estimates of 
consumer prices will provide more benefit to consumers, allowing them 
to better estimate their potential out-of-pocket costs and search for 
items and services they feel are more affordable.
2. Requirement To Make Available Machine-Readable Files of In-Network 
Rates, Historical Data for Out-of-Network Allowed Amount Payments Made 
to Out-of-Network Providers, and Prescription Drug Pricing Information 
on a Public Website
    In proposing the requirement that group health plans and health 
insurance issuers post in-network rates, historical data for out-of-
network allowed amount payments made to out-of-network providers, and 
negotiated rates and historical net prices for each prescription drug 
on a publicly accessible website, the Departments considered requiring 
plans and issuers to submit the internet addresses for the machine-
readable files to CMS. CMS would then make the information available to 
the public from CMS's website. A central location could allow the 
public to access in-network rate information, out-of-network allowed 
amounts, and prescription drug information for all plans and issuers in 
one place, potentially reducing confusion and increasing accessibility. 
Posting in-network rates, out-of-network allowed amounts, and 
prescription drug information in a central location might also make it 
easier to post available quality information alongside price 
information. However, to provide flexibility and reduce costs, the 
Departments are of the view that plans and issuers should determine 
where to post the in-network rate, out-of-network allowed amount, and 
prescription drug information rather than prescribing the location 
where the information is to be disclosed. Further, requiring plans and 
issuers to submit internet addresses for their machine-readable files 
to CMS would result in additional costs to the extent plans and issuers 
already post this information in a different location.
3. Frequency of Updates to Machine-Readable Files
    In developing 26 CFR 54.9815-2715A3(b)(3), 29 CFR 2590.715-
2715A3(b)(3), and 45 CFR 147.212(b)(3) of the final rules, the 
Departments considered requiring more frequent updates (i.e., within 10 
calendar days of new rate finalization) to the in-network rates, out-
of-network allowed amounts, and prescription drug information. More 
frequent updates would provide a number of benefits for patients, 
providers, and the public at large. Specifically, such a process would 
ensure that the public has access to the most up-to-date rate 
information so that consumers can make the most meaningful, informed 
decisions about their health care utilization. Requiring group health 
plans, health insurance issuers, and TPAs (or other entity acting on a 
plan or issuers behalf) to update the machine-readable files more 
frequently would result in increased costs for those affected entities, 
however. With respect to the In-network Rate File, the Departments 
estimate that requiring updates within 10 calendar days of rate 
finalization would result in each plan, issuer, or TPA incurring a 
burden of 4,428 hours, with an associated equivalent cost of $635,112 
in the second year after implementation of the final rules and an 
annual burden of 1,116 hours, with an associated equivalent cost of 
$162,828 in subsequent years. Based on recent data the Departments 
estimate a total 1,959 entities--1,754 issuers \281\ and 205 TPAs 
\282\--will be responsible for implementing the final rules. For all 
1,959 issuers and TPAs, the total burden, in the second year of 
implementation of the final rules, would be 8,674,452 hours, with an 
associated equivalent cost of $1,244,184,408 and an annual ongoing 
burden of 2,186,244 hours, with an associated ongoing annual costs of 
$318,980,052 in subsequent years. As discussed in section VI.A.2, 
requiring a less frequent 30 calendar day update will reduce the 
burden, in year two, for each entity to 1,476 hours with an associated 
equivalent cost of $211,704. The burden and associated costs, in 
subsequent years, will be reduced to 372 hours, with an associated cost 
of $54,276. For all 1,959 issuers and TPAs, the total burden, in year 
two, is reduced to 2,891,484 hours, with and associated equivalent cost 
of $414,728,136. For subsequent years, the total burden is reduced to 
728,748 hours, with an associated equivalent cost of $106,326,684. With 
respect to the Allowed Amount File, the Departments estimate that 
requiring updates within 10 calendar days of rate finalization would 
result in each plan, issuer, or TPA incurring a burden of 1,908 hours, 
with an associated equivalent cost of $290,628 in the second year and 
an annual ongoing burden of 468 hours, with an associated equivalent 
cost of $61,452 in subsequent years. For all 1,959 issuers and TPAs, 
the total burden, in year two, would be 3,737,772 hours with and 
associated equivalent cost of $569,340,252. For subsequent years, the 
total ongoing burden would be 916,812 hours, with an associated 
equivalent cost of $120,384,468. As further discussed in section 
VI.A.2, requiring a less frequent update will reduce the year two 
burden for each issuer and TPA to 636 hours, with an associated 
equivalent cost of $96,876. For subsequent years, the total ongoing 
burden will be reduced to 156 hours, with an associated equivalent cost 
of $20,848. For all 1,959 issuers and TPAs, the total burden for year 
two is reduced to 1,245,924 hours, with an associated equivalent cost 
of $189,780,084. For subsequent years, the total ongoing burden will be 
reduced to 305,604 hours, with an associated equivalent cost of 
$40,128,156. With respect to the Prescription Drug File, the 
Departments estimate that requiring updates within 10 calendar days of 
rate finalization would result in each plan, issuer, or TPA incurring a 
burden of 2,700 hours, with an associated equivalent cost of $416,664 
in the second year and an annual ongoing burden of 1,116 hours, with an 
associated equivalent cost of $162,828 in subsequent years. For all 
1,959 issuers and TPAs, the total burden, in year two, would be 
5,289,300 hours with and associated equivalent cost of $816,244,776. 
For subsequent years, the total ongoing burden would 2,186,244 hours, 
with an associated equivalent cost of $318,980,052. As discussed in 
section VI.A.2, requiring a less frequent update will reduce the year 
two burden for each issuer and TPA to 900 hours, with an associated 
equivalent cost of $138,888. For subsequent years, the total ongoing 
burden will be reduced to 372 hours,

[[Page 72272]]

with an associated equivalent cost of $54,276. For all 1,959 issuers 
and TPAs, the total burden for year two is reduced to 1,763,100 hours, 
with an associated equivalent cost of $272,081,592. For subsequent 
years, the total ongoing annual burden will be reduced to 728,748 
hours, with an associated equivalent cost of $106,326,684. By requiring 
monthly updates to the machine-readable files, rather than updates 
every 10 calendar days, the Departments have chosen to strike a balance 
between placing a significant burden on issuers (and their service 
providers) and assuring the availability of accurate information.
---------------------------------------------------------------------------

    \281\ 2018 MLR Data Trends.
    \282\ Non-issuer TPAs based on data derived from the 2016 
Benefit Year reinsurance program contributions.
---------------------------------------------------------------------------

4. File Format Requirements
    In 26 CFR 54.9815-2715A3(b)(2), 29 CFR 2590.715-2715A3(b)(2), and 
45 CFR 147.212(b)(2), the final rules require group health plans and 
health insurance issuers to post information in three machine-readable 
files. A machine-readable file is defined as a digital representation 
of data or information in a file that can be imported or read by a 
computer system for further processing without human intervention, 
while ensuring no semantic meaning is lost. The final rules require 
each machine-readable file to use a non-proprietary, open format. The 
Departments considered requiring issuers and TPAs to post in-network 
rates, allowed amounts paid for out-of-network services, and 
prescription drug information using a specific file format, namely 
JSON. However, the Departments are of the view that being overly 
prescriptive regarding the file type will impose an unnecessary costs 
on issuers and TPAs despite the advantages of JSON, namely that JSON 
files are downloadable and readable for many health care consumers, and 
the potential for JSON to simplify the ability of price transparency 
tool developers to access the data. Therefore, the Departments are 
requiring that issuers and TPAs post the in-network rate, allowed 
amount, and prescription drug pricing information in three distinct 
machine-readable files using a non-proprietary, open format. The 
Departments will provide additional guidance regarding the file format 
in future technical implementation guidance.
    In addition, the Departments considered requiring plans and issuers 
to provide the specific out-of-network allowed amount methodology 
needed for consumers to determine out-of-pocket liability for services 
by providers not considered in-network by the plan or issuer, rather 
than historical data on paid out-of-network claims. However, the 
Departments understand providing a formula or methodology for 
calculating a provider's out-of-network allowed amount does not provide 
the data users need in an easy-to-use machine-readable format. The 
Departments determined that providing monthly data files on allowed 
amounts by plans and issuers over a 90-day period for items and 
services provided by out-of-network providers will enable users to more 
readily determine what costs a plan or issuer may pay toward items or 
services obtained out-of-network. Because a plan or issuer does not 
have a contract with an out-of-network provider that establishes 
negotiated rates, the plan or issuer cannot anticipate what that 
provider's charges will be for any given item or service; therefore, 
the Departments, as discussed previously in this preamble, are 
requiring the inclusion of billed charges in the Allowed Amounts File.
    Providing data on the billed charge in connection with each unique 
allowed amount on the out-of-network Allowed Amount File will provide 
consumer with information related to what their plan or issuer will 
likely contribute to the costs of items or services obtained from out-
of-network providers and the billed charges associated with those item 
or services. This information will provide the consumer with a 
reasonably accurate estimate of the amount of additional liability a 
consumer could be required to pay for a particular item or service 
received from an out-of-network provider. Out-of-network allowed amount 
and billed charges data will provide increased price transparency for 
consumers, and the costs related to producing these data are not 
considered to be significantly higher than that associated with 
producing the methodology for determining allowed amounts for payments 
to out-of-network providers. Given these circumstances, the final rules 
are requiring that payers provide allowed amount data for out-of-
network covered items or services furnished by a particular out-of-
network provider during the 90-day time period that begins 180 days 
prior to the publication date of the Allowed Amount File, and billed 
charges rather than requiring plans and issuers to report their 
methodology or formula for calculating the allowed amounts for out-of-
network items and services.
5. Requiring Disclosure of Cost-Sharing Information to Participants, 
Beneficiaries, and Enrollees and Publicly-Posted Machine-Readable Files 
With In-Network Rates, Out-of-Network Allowed Amounts, and Prescription 
Drug Pricing Information
    The Departments considered whether it would be duplicative to 
require group health plans and health insurance issuers to disclose 
cost-sharing information through an internet-based self-service tool or 
in paper form to participants, beneficiaries, or enrollees so that they 
may obtain an estimate of their cost-sharing liability for covered 
items and services and publicly-posted machine-readable files 
containing data on in-network rates, out-of-network allowed amounts, 
and prescription drug pricing information. The requirement to disclose 
cost-sharing information to participants, beneficiaries, or enrollees 
in the final rules require plans and issuers to provide consumer-
specific information on potential cost-sharing liability to enrolled 
consumers, complete with information about their deductibles, copays, 
and coinsurance. However, cost-sharing information for these plans and 
coverage would not be available or applicable to consumers who are 
uninsured or shopping for plans pre-enrollment. Data disclosed to 
participants, beneficiaries, or enrollees would also not be available 
to third parties who are interested in creating internet-based self-
service tools to assist both uninsured and insured consumers with 
shopping for the most affordable items or services. Limiting access to 
data to a subset of consumers would not promote the transparency goals 
of the final rules and would reduce the potential for the final rules 
to drive down health care costs by increasing competition.
    As discussed in more detail in section VI.A.1 in this preamble, the 
Departments have estimated the high-end three-year average annual cost 
to develop only the internet-based self-service tool, including the 
initial tool build and maintenance, customer service training, customer 
assistance, and mailing costs. The Departments estimate the three-year 
average total burden per issuer, or TPA will be approximately 23,338 
hours, with an associated equivalent average annual cost of 
approximately $3,262,262. For all 1,959 issuers and TPAs, the 
Departments estimate the total three-year average annual burden will be 
45,718,171 hours with an associated equivalent total average annual 
cost of approximately $6,390,770,952.

[[Page 72273]]

    Additionally, the Departments estimated that for implementation of 
the required internet-based self-service tool in conjunction with the 
out-of-network allowed amount, in-network and prescription drug 
machine-readable files, the Departments estimate that the annual high-
end three-year average annual costs and burden for each issuer or TPA 
will be approximately 28,958 hours, with an associated equivalent cost 
of approximately $4,040,142. For all 1,959 issuers and TPAs, the 
Departments estimate the total three-year average annual burden and 
cost to be 56,727,751 hours with an associated equivalent total average 
annual cost of approximately $7,914,635,260.
    In contrast, and as discussed in more detail in section VI.A.1, the 
Departments estimate that the low-end three-year average burden and 
cost to develop and maintain only the internet-based self-service tool, 
including the initial tool build and maintenance, customer service 
training, customer assistance, and mailing costs. The Departments 
estimate the total three-year average cost and burden per issuer or TPA 
will be approximately 15,475 hours, with an associated equivalent 
average annual cost of approximately $2,150,169. For all 1,959 issuers 
and TPAs, the Departments estimate the total three-year average annual 
burden to be 30,315,730 hours with an associated equivalent total 
average annual cost of approximately $4,212,181,157.
    Finally, the Departments estimated that for implementation of the 
required internet-based self-service tool in conjunction with the out-
of-network allowed amount, in-network rate, and prescription drug 
machine-readable files, the Departments estimate that the three-year 
average annual low-end cost and burden for each issuer or TPA will be 
approximately 21,095 hours, with an associated equivalent average 
annual cost of approximately $2,928,048. For all 1,959 issuers and 
TPAs, the Departments estimate the total three-year average annual low-
end burden and cost will be 41,325,310 hours with an associated 
equivalent total average annual cost of approximately $5,736,045,465. 
While the Departments recognize that requiring disclosures through all 
mechanisms will increase the costs for issuers and TPAs required to 
comply with the final rules, the Departments are of the view that the 
additional costs associated with greater price transparency are 
outweighed by the benefits that will accrue to the broader group of 
consumers (such as the uninsured and individuals shopping for coverage) 
and other individuals who would benefit directly from the additional 
information provided through the machine-readable files. Additionally, 
the Departments are of the view that the final rules have the potential 
to reduce the cost of surprise billing to consumers. The Departments 
further believe that the final rules will, with the disclosure of in-
network rates, potentially apply pressure on providers to bill less 
aggressively. Consumer advocacy groups could also use the wide price 
dispersion of the same CPT level service or NDC level drug by the same 
providers with different negotiated rates, depending upon issuer or TPA 
contract, to further place downward pressure on health care costs. In 
addition, as noted earlier in section II.C.1-2 of this preamble, 
researchers and third-party developers will also be able to use the 
data included in the machine-readable files in a way that could create 
even more benefits to consumers, including those consumers not 
currently enrolled in a particular plan or coverage. For these reasons, 
the Departments have concluded that, in addition to requiring plans and 
issuers to disclose cost-sharing information to participants, 
beneficiaries, or enrollees through an internet-based self-service 
tool, requiring plans and issuers to publicly disclose information 
regarding in-network rates, out-of-network allowed amounts, and 
prescription drug pricing will further the goals of price transparency 
and create benefits for all potentially affected stakeholders.
6. Requiring an Internet-Based Self-Service Tool and Machine-Readable 
Files in Lieu of an API
    The Departments considered whether to require group health plans 
and health insurance issuers to make the information required by the 
final rules available through a standards-based API, instead of through 
the proposed internet-based self-service tool and machine-readable 
files. Access to pricing information through an API could have a number 
of benefits for consumers, providers, and the public at large. This 
information could ensure the public has access to the most up-to-date 
rate information. Providing real-time access to pricing information 
through a standards-based API could allow third-party innovators to 
incorporate the information into applications used by consumers or 
combined with electronic medical records for point-of-care decision-
making and referral opportunities by clinicians for their patients. 
Additionally, being able to access this data through a standards-based 
API would allow consumers to use the application of their choice to 
obtain personalized, actionable health care price estimates, rather 
than being required to use one developed by their plan or issuer (or a 
service provider), although those consumers may be required to pay for 
access to those applications.
    While there are many benefits to a standards-based API, it is the 
Departments' view that both an internet-based tool and machine-readable 
files are the first iterative steps towards developing price 
transparency standards-based APIs. It is the Departments' view that 
standards-based API would be a natural next technological step. The 
Departments also recognize that the majority of issuers have an 
existing internet-based tool that could be enhanced to meet the 
disclosure requirements in the final rules. The burden associated with 
updating existing tools to standardize data attributes is going to be 
less than building a standards-based API. Looking at the average cost 
over a 3-year period for the API for all 1,959 issuers and TPAs, the 
Departments estimate an average annual cost that would significantly 
exceed the estimated annual cost of implementing the internet-based 
self-service tool and machine-readable files. The Departments recognize 
that the development of an API may be streamlined by leveraging 
existing APIs currently used by plans, issuers, or TPAs for their own 
applications. Additionally, any requirements for an API would build on 
the requirements finalized in CMS's Interoperability & Patient Access 
final rule \283\ requiring certain entities, such as Federally-
facilitated Exchange QHP issuers and companies that participate in both 
Medicare and the individual or group market, to provide certain data 
through a standards-based API. Building on the Interoperability & 
Patient Access final rule could result in significantly lower costs for 
issuers and TPAs as it relates to the development and implementation of 
a standards-based API. Nonetheless, while the Interoperability & 
Patient Access final rule focuses on the disclosure of information 
regarding post care and clinical data, the rules finalized here require 
plans and issuers to provide information related to a participant's, 
beneficiary's, or enrollee's individual's cost-sharing, allowed amounts 
for covered items and services from out-of-network providers, and 
negotiated rates and historical net prices for each prescription drug 
prior to seeking or obtaining care. The Departments are therefore of 
the view

[[Page 72274]]

that plans, issuers, and TPAs would incur significant and distinct 
costs if required to us a standards-based API to comply with the final 
rules.
---------------------------------------------------------------------------

    \283\ 85 FR 25510 (May 1, 2020).
---------------------------------------------------------------------------

    Although not estimated here, the Departments expect any associated 
maintenance costs would also decline in succeeding years as plans, 
issuers, and TPAs gain additional efficiencies or undertake similar 
procedures to maintain any currently used internal APIs. Nonetheless, 
weighing the costs of providing the required information using an 
internet-based self-service tool and machine-readable files against the 
potential costs of using a standards-based API, particularly given the 
timeframes required by the final rules, the Departments are of the view 
that, at least in the short-term, requiring an internet-based self-
service tool and machine-readable files is the more sensible approach.
    Even though the Departments are of the view that an internet-based 
self-service tool and machine-readable files are appropriate in the 
short-term, as discussed earlier in this preamble, the Departments 
recognize that a standards-based API format in the long-term may be 
more beneficial to the public, as it would provide access to the most 
up-to-date rate information; would allow health care consumers to use 
the application of their choice to obtain personalized, actionable 
health care service price estimates; and would allow third-party 
developers to use the collected data to develop internet-based self-
service tools. Therefore, the Departments are considering future 
rulemaking to further expand access to pricing information through 
standards-based APIs, including individuals' access to estimates about 
their own cost-sharing liability and information about in-network 
rates, historical payment data for out-of-network allowed amounts, and 
negotiated rates and historical net prices for prescription drugs.

VI. Collection of Information Requirements

    The final rules contain ICRs that are subject to review by OMB. A 
description of these provisions is given in the following paragraphs 
with an estimate of the annual burden, summarized in Table 24.
    To fairly evaluate whether an information collection should be 
approved by OMB, section 3506(c)(2)(A) of the PRA requires that the 
Departments solicit comment on the following issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of each of the Departments.
     the accuracy of the Departments' estimate of the 
information collection burden.
     the quality, utility, and clarity of the information to be 
collected.
     recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    The Departments solicited comment on each of the required issues 
under section 3506(c)(2)(A) of the PRA for the following information 
collection requirements.

A. Wage Estimates

    To derive wage estimates, the Departments generally use data from 
the BLS to derive average labor costs (including a 100 percent increase 
for fringe benefits and overhead) for estimating the burden associated 
with ICRs.\284\ One commenter noted that the markup rates for labor, 
fringe benefits, and overhead are underestimated at 100 percent, while 
the conventional standard is 200 percent to 300 percent. The commenter 
further stated that if the Departments were to update the burden 
estimates with the conventional standard for overhead markup, the total 
of annual quantified costs would increase to over $500 million per 
year.
---------------------------------------------------------------------------

    \284\ May 2018 Bureau of Labor Statistics, Occupational 
Employment Statistics, National Occupational Employment and Wage 
Estimates. Available at: https://www.bls.gov/oes/current/oes_stru.htm.
---------------------------------------------------------------------------

    The Departments acknowledge that there are various methodologies 
used to determine and estimate fringe benefits and other overhead 
costs; however, the commenter did not provide any source recognizing or 
supporting their assertion that the conventional standard is to use 200 
percent to 300 percent increases. The Departments agree that if a 
higher percentage were used to estimate hourly wages and overhead, then 
the estimated costs for the final rules could potentially be 
significantly higher. However, the Departments note that the use of 100 
percent is necessarily a rough adjustment, both because fringe benefits 
and overhead costs vary significantly across employers, and because 
methods of estimating these costs vary widely across studies. The 
Departments are of the view that doubling the hourly wage to estimate 
total cost is a reasonably acceptable estimation method.
    The Departments recognize that the maturity of technology will vary 
from organization to organization. An independent study by Bates White 
Economic Consulting (Bates White), commissioned by one commenter, 
developed an assessment of the costs of the proposed rules by 
interviewing a mix of 18 large and small health insurance issuers 
covering about 78 million lives. They reported various degrees of 
existing tools' compliance with the requirements of the proposed rules. 
The Departments reevaluated its initial burden estimates developed for 
the proposed rules based on feedback from commenters and the Bates 
Whites study. Because the Departments could not make an estimate for 
any specific issuer, an independent government cost estimate (IGCE) was 
conducted for each of the machine-readable files and the internet-based 
self-service tool to aid the Departments in conducting the burden and 
cost estimates for the final rules. The goals of an IGCE are to aid the 
government acquisition process in determining a project's cost 
estimates based on project requirements or objectives that are 
typically found in a performance work statement or statement of work. 
IGCEs are developed by the government without contractor influence and 
are based on market research. The estimated skill sets required to 
build both the internet based self-service tool and machine-readable 
files can be found in TABLE 3 below. The Departments based the IGCE 
cost estimates on the rule's requirements and each IGCE has baseline 
assumptions that are built into the final estimate.
    The IGCE assumptions for the internet-based self-service tool 
included things such as research, engineering development, and design 
and were not based on any existing tools. There was an assumption that 
product development would be done in the cloud to take advantage of 
economies of scale or with on-premise infrastructure that allows for 
the development of ``infrastructure as code.'' The IGCE assumptions for 
the machine-readable files included that all items and services for a 
specific plan have a negotiated price, that all price numbers are 
digitized, that pricing information is stored in many locations (not in 
a single database), that pricing information is accessible through 
internal systems, that building the first machine-readable file will 
facilitate automation for building future machine-readable files, and 
that there is an ability to run queries against claims data.
    Based on comments discussed later sections VI.A.1-2, the 
Departments have chosen to use the Contract Awarded Labor Category 
(CALC) \285\ database tool, managed by the General Services 
Administration (GSA), to derive the

[[Page 72275]]

hourly rates for the burden and cost estimates in the final rules. The 
CALC tool was built to assist acquisition professionals with market 
research and price analysis for labor categories on multiple U.S. GSA & 
Veterans Administration (VA) contracts. Wages obtained from the CALC 
database are fully burdened to account for fringe benefits and overhead 
costs. The Departments chose to use wages derived from the CALC 
database because, even though the BLS data set is valuable to 
economists, researchers, and others that would be interested in larger, 
more macro-trends in parts of the economy, the CALC data set is meant 
to help market research based on existing government contracts in 
determining how much a project/product will cost based on the required 
skill sets needed. The CALC data set also factors in the fully-burdened 
hourly rates (base pay + benefits) into wages whereas BLS rates do not. 
CALC occupations and wages provide the Departments with data that 
aligns more with, and provides more detail related to, the occupations 
required for the implementation of the requirements in the final rules. 
As discussed earlier, after consideration and discussion of comments, 
the Departments chose to further reevaluate the cost and burden 
estimates. Based on the Departments consultation with internal and 
external IT professionals and additional research, the Departments have 
chosen to increase our overall costs and burden estimates to account 
for our updated understanding of the burdens associated with the final 
rules and the additional requirements included in the final rules. The 
Departments further discuss changes to the final cost and burden 
estimates in the corresponding ICR sections.
---------------------------------------------------------------------------

    \285\ CALC information and wage rates are available at: https://calc.gsa.gov/about/.
---------------------------------------------------------------------------

    While the following estimates for the internet-based self-service 
tool assume that entities are either iterating on an existing tool or 
building a brand new tool from the ground up, the Departments are of 
the view that it is highly likely that third-party developers will take 
this opportunity to build white-label products that meet the 
requirements of the final rules and that they will reduce costs through 
economies of scale by doing so. As such, the Departments' cost 
estimates may have some tendency towards over-estimation.
    Table 3 presents the fully burdened hourly wage and job 
descriptions used in the Departments' estimates.

             Table 3--Hourly Wages Used in Burden Estimates
------------------------------------------------------------------------
                                                                  Mean
                                                                 hourly
                    CALC occupation title                      wage  ($/
                                                                 hour)
------------------------------------------------------------------------
Project Manager/Team Lead....................................    $153.00
Scrum Master.................................................     105.00
Technical Architect/Sr. Developer............................     149.00
Application Developer, Senior................................     143.00
Business Analyst.............................................     120.00
UX Researcher/Service Designer...............................     154.00
Designer.....................................................     116.00
DevOps Engineer..............................................     181.00
Customer Service Representative..............................      40.00
Web Database/Application Developer IV........................     152.00
Service Designer/Researcher..................................     114.00
------------------------------------------------------------------------

1. ICR Regarding Requirements for Disclosures to Participants, 
Beneficiaries, or Enrollees (26 CFR 54.9815-2715A2, 29 CFR 2590.715-
2715A2, and 45 CFR 147.211)
    The Departments add 26 CFR 54.9815-2715A2(b), 29 CFR 2590.715-
2715A2(b), and 45 CFR 147.211(b), requiring group health plans and 
health insurance issuers of individual and group health insurance 
coverage to disclose, upon request, to a participant, beneficiary, or 
enrollee, such individual's cost-sharing information for items; 
negotiated rates and underlying fee schedule rates for in-network 
providers; and allowed amounts for covered items and services from out-
of-network providers. As discussed previously in section II.B.1 of this 
preamble, in paragraphs 26 CFR 54.9815-2715A2(b)(1)(i), 29 CFR 
2590.715-2715A2(b)(1)(i), and 45 CFR 147.211(b)(1)(i) through (vii) the 
final rules require plans and issuers to make this information 
available through an internet-based self-service tool on an internet 
website and, if requested, in paper form or other format agreed upon 
between the plan, issuer, or TPA and participant, beneficiary, or 
enrollee.
    The final rules require plans and issuers to disclose, upon 
request, certain information relevant to a determination of a 
participant's, beneficiary's, or enrollee's cost-sharing liability for 
a particular health care item or service from a particular provider, to 
the extent relevant to the individual's cost-sharing liability for the 
item or service, in accordance with seven content elements: The 
individual-specific estimated cost-sharing liability; the individual-
specific accumulated amounts; the in-network rate; the out-of-network 
allowed amount for a covered item or service, if applicable; the items 
and services content list when the information is for items and 
services subject to a bundled payment arrangement; a notice of 
prerequisites to coverage (such as prior authorization); and a 
disclosure notice. However, as discussed earlier in this section II.B.1 
of this preamble, in instances where items or services, generally 
considered preventive, are furnished as non-preventive items or 
services, the participant, beneficiary, or enrollee may be subject to 
the cost-sharing terms of his or her plan. If a plan or issuer cannot 
determine whether the request is for a preventive item or service, the 
plan or issuer must display the non-preventive cost-sharing liability, 
along with a note that the item or service may not be subject to cost-
sharing if it is billed as a preventive service. The final rules also 
require the disclosure notice to include several statements, written in 
plain language, which include disclaimers relevant to the limitations 
of the cost-sharing information disclosed, including: A statement that 
out-of-network providers may balance bill participants, beneficiaries, 
or enrollees, a statement that the actual charges may differ from those 
for which a cost-sharing liability estimate is given, and a statement 
that the estimated cost-sharing liability for a covered item is not a 
guarantee that coverage will be provided for those items and services. 
In addition, plans and issuers will be permitted to add other 
disclaimers they determine appropriate so long as such information is 
not in conflict with the disclosure requirements of the final rules. 
The Departments have developed model language that plans and issuers 
will be able to use to satisfy the requirement to provide the notice 
statements described earlier in section II.B.1 of this preamble.
    As discussed in section II.B.1 of this preamble, the final rules 
require plans and issuers to make available the information described 
in 26 CFR 54.9815-2715A2(b), 29 CFR 2590.715-2715A2(b), and 45 CFR 
147.211(b) of the final rules through an internet-based self-service 
tool. The information is required to be provided in plain-language 
through real-time responses. Plans and issuers will be required to 
allow participants, beneficiaries, or enrollees to search for cost-
sharing information for covered items and services by billing code, or 
by descriptive term, per the user's request, in connection with a 
specific in-network provider, or for all in-network providers. In 
addition, the internet-based self-service tool must allow users to 
input information necessary to determine the out-of-network allowed 
amount for a covered item or service

[[Page 72276]]

provided by an out-of-network provider (such as zip code). The 
internet-based self-service tool is required to have the capability to 
refine and reorder results by the geographic proximity of in-network 
providers, and the estimated amount of cost-sharing liability to the 
beneficiary, participant, or enrollee.
    As discussed in sections II.B.1 and 2 earlier in this preamble, the 
final rules require plans and issuers to furnish upon request, in paper 
form, the information required to be disclosed under 26 CFR 54.9815-
2715A2(b)(1), 29 CFR 2590.715-2715A2(b)(1), and 45 CFR 147.211(b)(1) of 
the final rules to a participant, beneficiary, or enrollee. As 
discussed in sections II.B.1 and 2 in this preamble, a paper disclosure 
is required to be furnished according to the consumer's filtering and 
sorting preferences and mailed to the participant, beneficiary, or 
enrollee within two business days of receiving the request. Plans or 
issuers may, upon request, provide the required information through 
other methods, such as over the phone, through face-to-face encounters, 
by facsimile, or by email.
    The Departments assume fully-insured group health plans will rely 
on issuers to develop and maintain the internet-based self-service tool 
and provide any requested disclosures in paper form. While the 
Departments recognize that some self-insured plans might independently 
develop and maintain the internet-based self-service tool, at this time 
the Departments assume that self-insured plans will rely on TPAs 
(including issuers providing administrative services and non-issuer 
TPAs) to develop the required internet-based self-service tool. The 
Departments make this assumption because the Departments understand 
that most self-insured group health plans rely on TPAs for performing 
most administrative duties, such as enrollment and claims processing. 
For those self-insured plans that choose to develop their own internet-
based self-service tools, the Departments assume that they will incur a 
similar cost and burden as estimated for issuers and TPAs, as discussed 
in section VI.A.1 later in this preamble. In addition, 26 CFR 54.9815-
2715A2(b)(3), 29 CFR 2590.715-2715A2(b)(3), and 45 CFR 147.211(b)(3) of 
the final rules provide for a special rule to prevent unnecessary 
duplication of the disclosures with respect to health insurance 
coverage, which provides that a plan may satisfy the disclosure 
requirements if the issuer offering the coverage is required to provide 
the information pursuant to a written agreement between the plan and 
issuer. Thus, the Departments have used issuers and TPAs as the unit of 
analysis for the purposes of estimating required changes to IT 
infrastructure and administrative costs and burdens. The Departments 
estimate approximately 1,754 issuers and 205 TPAs will be affected by 
the final rules.
    The Departments acknowledge that the costs described in these ICRs 
may vary depending on the number of lives covered, the number of 
providers and items and services for which cost-sharing information 
must be disclosed, and the fact that some plans and issuers already 
have robust tools that can be easily adapted to meet the requirements 
of the final rules. In addition, plans and issuers may be able to 
license existing cost estimator tools offered by third-party vendors, 
obviating the need to establish and maintain their own internet-based 
self-service tools. The Departments assume that any related vendor 
licensing fees would be dependent upon complexity, volume, and 
frequency of use, but assume that such fees would be lower than an 
overall initial build and associated maintenance costs. Nonetheless, 
for purposes of the estimates in these ICRs, the Departments assume all 
1,959 issuers and TPAs will be affected by the final rules. The 
Departments also developed the following estimates based on the mean 
average size, by covered lives, of issuers or TPAs. As noted later in 
this section, the Departments sought comment on the inputs and 
assumptions that were used to develop these cost and burden estimates, 
particularly regarding existing efficiencies that would reduce the cost 
and burden estimates.
High Range Estimate for Internet-Based Self-Service Tool From Start-Up 
to Operational Functionality
    The Departments estimate that the one-time costs and burden each 
issuer or TPA will incur to complete the one-time technical build; 
including activities such as planning, assessment, budgeting, 
contracting, building and systems testing, incorporating any necessary 
security measures, incorporating disclaimer and model notice language, 
or development of the model and disclaimer notice materials for those 
that choose to make alterations. The Departments assume that this one-
time cost and burden will be incurred in 2022 to develop and build the 
internet-based self-service tool and provide information for the 500 
required items and services, and additional one-time costs will be 
incurred in 2023 in order to fully meet the requirements of the final 
rules. As mentioned earlier in section V.A.2 of this preamble, the 
Departments acknowledge that a number of issuers and TPAs have 
previously developed some level of internet-based self-service tool 
similar to, and containing some functionality related to, the 
requirements in the final rules. The Departments thus seek to estimate 
a burden and cost range (high-end and low-end) associated with the 
final rules for those issuers and TPAs. In order to develop the high-
end hourly burden and cost estimates, the Departments assume that all 
issuers and TPAs will need to develop and build their internet-based 
self-service tool from start-up to operational functionality. The 
Departments estimate that for each issuer or TPA it will take a Project 
Manager/Team Lead 4,160 hours (at $153 per hour), a Scrum Master 4,160 
hours (at $105 per hour), a Technical Architect/Sr. Developer 4,160 
hours (at $149 per hour), an Application Developer, Senior 4,160 hours 
(at $143 per hour), a Business Analyst 4,160 hours (at $120 per hour), 
a UX Researcher/Service Designer 4,160 hours (at $154 per hour), a 
Designer 4,160 hours (at $116 per hour), a DevOps Engineer 4,160 hours 
(at $181 per hour), and a Web Database/Application Developer IV 4,160 
hours to complete this task. The Departments estimate the total burden 
per issuer or TPA will be approximately 37,440 hours, with an 
equivalent cost of approximately $5,295,680. For all 1,959 issuers and 
TPAs, the total first year one-time total burden is estimated to be 
73,344,960 hours, with an equivalent total cost of approximately 
$10,374,237,120. The Departments' estimates are higher-bound estimates 
that do not consider potential cost savings that could be realized 
should issuers and TPAs buy or lease an internet-based self-service 
tool from a third-party vendor or other issuer. However, the 
Departments are of the view that issuers or TPAs that choose to buy or 
rent an internet-based self-service tool from another entity could 
incur significantly less costs and burdens.

[[Page 72277]]



Table 4A--Total High-End First Year Estimated One-Time Cost and Hour Burden for Internet-Based Self-Service Tool
                                             for Each Issuer or TPA
----------------------------------------------------------------------------------------------------------------
                                                                  Burden hours     Labor cost     Total cost per
                        CALC occupation                          per respondent     per hour        respondent
----------------------------------------------------------------------------------------------------------------
Project Manager/Team Lead.....................................            4,160         $153.00      $636,480.00
Scrum Master..................................................            4,160          105.00       436,800.00
Technical Architect/Sr. Developer.............................            4,160          149.00       619,840.00
Application Developer, Senior.................................            4,160          143.00       594,880.00
Business Analyst..............................................            4,160          120.00       499,200.00
UX Researcher/Service Designer................................            4,160          154.00       640,640.00
Designer......................................................            4,160          116.00       482,560.00
DevOps Engineer...............................................            4,160          181.00       752,960.00
Web Database/Application Developer IV.........................            4,160          152.00       632,320.00
                                                               -------------------------------------------------
Total per respondent..........................................           37,440  ..............     5,295,680.00
----------------------------------------------------------------------------------------------------------------


Table 4B--Total High-End First Year Estimated One-Time Cost and Hour Burden for Internet-Based Self-Service Tool
                                            for All Issuers and TPAs
----------------------------------------------------------------------------------------------------------------
                                               Burden hours per
Number of respondents   Number of responses       respondent        Total burden hours          Total cost
----------------------------------------------------------------------------------------------------------------
             1,959                  1,959              37,440.0            73,344,960          $10,374,237,120
----------------------------------------------------------------------------------------------------------------

    Several commenters stated that the Departments grossly 
underestimated the cost burden of implementation on plans and issuers. 
One commenter stated that surveyed issuers estimated an average cost of 
$6.2 million to build, develop or modify, implement, test, and launch 
an internet-based self-service tool. This is 28 times greater than the 
Departments' proposed estimate for an issuer that needs to build a new 
tool and 112 times greater than the Departments' estimate for an issuer 
that has an existing tool. Furthermore, this commenter noted that 
surveyed issuers estimated average annual maintenance costs of $1.4 
million per issuer--over 100 times greater than those anticipated by 
the Departments. Surveyed issuers also estimated set-up costs that 
averaged about $5.53 million (ranging from $1,000,000 to $15,000,000) 
compared to the Departments' proposed estimate of $221,029. This is 
more than 25 times what the Departments estimated as the cost for a 
full build of the internet-based self-service tool. Although most of 
the issuers surveyed had an existing internet-based self-service tool 
meeting many of the required elements of the final rules, several 
issuers expressed significant concern about the cost and feasibility of 
complying with the requirements of the proposed rules. Specifically, 
the issuers surveyed expressed concerns noting that the requirements 
may necessitate a complete rebuild of their consumer tool. The surveyed 
issuers further indicated that the proposed rules would be costlier 
than implementing real-time claims adjudication, in which the claim for 
the medical service is adjudicated at the time the service is provided. 
They stated that they would need to effectively adjudicate the claim 
before it actually happens--to provide estimates for every conceivable 
type of medical item or service while integrating this information with 
various benefits. The surveyed issuers also noted that condensing all 
of the detail required in the final rules into a user-friendly format 
for use by enrollees would be a considerable and possibly even 
infeasible challenge. They further stated that the Departments' 
assumption that issuers with an existing internet-based self-service 
tool would face a lower hour burdens and costs to comply with the 
proposed rules was incorrect.
    The Departments have considered the comments submitted in response 
to the cost and burden estimates related to the internet-based self-
service tool. In response, the Departments have adjusted the costs and 
burden estimates to better reflect and align with the values submitted 
by commenters. In addition, the Departments have developed the 
estimates above, and in other ICR sections, using CALC wage rates as 
discussed in section VI.A of this preamble.
Low Range Estimate for Internet-Based Self-Service Tool Requiring 
Partial Build
    The Departments recognize that a significant number of issuers and 
TPAs may already have some form of internet-based self-service tool 
that allows for comparison shopping of different plans and that a large 
number of issuers and TPAs may currently provide participants, 
beneficiaries, or enrollees with the ability to obtain some estimated 
out-of-pocket costs.\286\ For those issuers and TPAs that currently 
have some level of functional internet-based self-service tool that 
would meet some (or all) of the requirements of the final rules, the 
Departments recognize that these entities may incur lower burdens and 
costs overall, as the Departments are of the view that these entities 
may require an overall lower level of effort and capital expenditure to 
meet the requirements of the final rules. Thus, the Departments have 
estimated a low-end burden and cost to comply with the final rules. 
Assuming that over 90 percent of issuers and TPAs currently provide an 
internet-based self-service tool and will only be required to make 
changes to their current system in order to meet the requirements in 
the final rules, the Departments estimate that 175 issuers and 21 TPAs 
will be required to develop an internet-based self-service tool from 
start-up to operational functionality. The Departments also estimate 
that each of those 196 entities will incur a first-year one-time cost 
and burden of approximately 37,440 hours, with an

[[Page 72278]]

equivalent cost of approximately $5,295,680 (as discussed previously in 
this ICR). For those 196 entities, the total first year one-time burden 
is estimated to be 7,334,496 hours with an equivalent total cost of 
approximately $1,037,423,712.
---------------------------------------------------------------------------

    \286\ See AHIP release dated August 2, 2019. ``AHIP Issues 
Statement on Proposed Rule Requiring Disclosure of Negotiated 
Prices.'' America's Health Insurance Providers. August 2, 2019. 
Available at: https://www.ahip.org/ahip-issues-statement-on-proposed-rule-requiring-disclosure-of-negotiated-prices/; see also 
Higgins, A., Brainard, N., and Veselovskiy, G. ``Characterizing 
Health Plan Price Estimator Tools: Findings from a National 
Survey.'' 22 Am. J. Managed Care 126. 2016. Available at: https://ajmc.s3.amazonaws.com/_media/_pdf/AJMC_02_2016_Higgins%20(final).pdf.

  Table 5A--Low-Range First Year One-Time Cost and Hour Burden for Internet-Based Self-Service Tool for Issuers
                                       and TPAs Requiring a Complete Build
----------------------------------------------------------------------------------------------------------------
                                               Burden hours per
Number of respondents   Number of responses       respondent        Total burden hours          Total cost
----------------------------------------------------------------------------------------------------------------
               196                    196                37,440             7,334,496        $1,037,423,712.00
----------------------------------------------------------------------------------------------------------------

    The Departments estimate that those issuers and TPAs that will only 
be required to make changes to their existing systems will already have 
operational capabilities that meet approximately 70 percent of the 
requirements in the final rules and will only incur costs and burdens 
related to changes needed to fully meet the requirements of the final 
rules. Based on this assumption, the Departments estimate that 1,579 
issuers and 184 TPAs will incur a first-year one-time hour burden of 
11,232 hours, with an associated cost of $1,588,704.00 to fully satisfy 
the initial requirements of the final rules. For all 1,763 issuers and 
TPAs, the Departments estimates the total first year one-time burden 
will be 19,803,139 hours, with an equivalent total cost of 
approximately $2,801,044,022.40. The Departments recognize that issuers 
and TPAs may currently have some form of internet-based self-service 
tool that may provide greater functionality that could meet a greater 
proportion of the requirements in the final rules. In those cases, 
issuers and TPAs could see lower costs and burdens. The Departments 
also recognize that there are likely a number of issuers and TPAs that 
currently provide some form of internet-based self-service tool that 
would require more development to meet the requirements of the final 
rules. In those instances, those issuers and TPAs could incur greater 
costs and burdens. The Departments' estimates are higher-bound 
estimates that do not consider potential cost savings that could be 
realized should issuers and TPAs buy or lease an internet-based self-
service tool from a third-party vendor or other issuer. However, the 
Departments are of the view that issuers or TPAs that choose to buy or 
rent an internet-based self-service tool from another entity could 
incur significantly less costs and burdens.

 Table 5B--Low-End First Year One-Time Cost and Hour Burden for Internet-Based Self-Service Tool for Issuers and
                                       TPAs Requiring Only a Partial Build
----------------------------------------------------------------------------------------------------------------
                                               Burden hours per
Number of respondents   Number of responses       respondent        Total burden hours          Total cost
----------------------------------------------------------------------------------------------------------------
             1,763                  1,763                11,232            19,803,139        $2,801,044,022.40
----------------------------------------------------------------------------------------------------------------


  Table 5C--Total Low-End First Year One-Time Cost and Hour Burden for Internet-Based Self-Service Tool for all
                                                Issuers and TPAs
----------------------------------------------------------------------------------------------------------------
                                               Burden hours per
Number of respondents   Number of responses       respondent        Total burden hours          Total cost
----------------------------------------------------------------------------------------------------------------
             1,959                  1,959                13,853            27,137,635        $3,838,467,734.40
----------------------------------------------------------------------------------------------------------------

    In addition to the range of one-time costs and burdens estimated in 
Tables 4B, 5B, 5C, 6A, and 6B, issuers and TPAs will incur annual costs 
such as those related to ensuring cost estimation accuracy, providing 
quality assurance, conducting website maintenance and making updates, 
and enhancing or updating any needed security measures. The Departments 
estimate that for each issuer and TPA, it will take a Project Manager/
Team Lead 1,040 hours (at $153 per hour), a Scrum Master 1,300 hours 
(at $105 per hour), an Application Developer, Senior 1,560 hours (at 
$143 per hour), a Business Analyst (at $120.00 per hour) 520 hours, a 
Designer (at $116.00 per hour) 1,040 hours, a DevOps Engineer (at 
$181.00 per hour) 520 hours, a Web Database/Application Developer IV 
(at $152.00 per hour) 1,560 hours, and a UX Researcher/Service Designer 
520 hours (at $154 per hour) to perform these tasks. The total annual 
burden for each issuer or TPA will be 8,060 hours, with an equivalent 
cost of approximately $1,113,060. For all 1,959 issuers and TPAs, the 
total annual maintenance burden is estimated to be 15,789,540 hours, 
with an equivalent associated total cost of approximately 
$2,180,484,540.00. The Departments recognize that issuers and TPAs will 
likely have varying levels of IT capabilities and experience in 
maintaining and internet-based tool and could incur higher or lower 
costs and burdens depending on those capabilities. The Departments 
expect maintenance costs to decline in succeeding years as issuers and 
TPAs gain efficiencies and experience in updating and managing their 
internet-based self-service tool.

[[Page 72279]]



 Table 6A--Estimated Year Two Implementation Cost and Hour Burden for Internet-Based Self-Service Tool for Each
                                                  Issuer or TPA
----------------------------------------------------------------------------------------------------------------
                                                                 Burden hours   Labor cost  per   Total cost per
                          Occupation                            per respondent        hour          respondent
----------------------------------------------------------------------------------------------------------------
Project Manager/Team Lead....................................            3,120          $153.00      $477.360.00
Scrum Master.................................................            3,120           105.00       327,600.00
Technical Architect/Sr. Developer............................            3,120           149.00       464,880.00
Application Developer, Senior................................            4,160           143.00       594,880.00
Business Analyst.............................................            2,080           120.00       249,600.00
UX Researcher/Service Designer...............................            2,080           154.00       320,320.00
Designer.....................................................            1,560           116.00       180,960.00
DevOps Engineer..............................................            2,080           181.00       376,480.00
Web Database/Application Developer IV........................            3,120           152.00
                                                              --------------------------------------------------
    Total per Respondent.....................................           24,440  ...............     3,446,320.00
----------------------------------------------------------------------------------------------------------------


  Table 6B--Estimated Year Two Implemenation Cost and Hour Burden for Internet-Based Self-Service Tool for All
                                                Issuers and TPAs
----------------------------------------------------------------------------------------------------------------
      Number of                                Burden hours  per
     respondents       Number of  responses       respondent        Total burden  hours         Total cost
----------------------------------------------------------------------------------------------------------------
             1,959                  1,959              24,440.0            47,877,960        $6,611,791,830.97
----------------------------------------------------------------------------------------------------------------

    In addition to the range of one-time costs and burdens estimated in 
Tables 4B, 5B, 5C, 6A, and 6B, issuers and TPAs will incur annual costs 
such as those related to ensuring cost estimation accuracy, providing 
quality assurance, conducting website maintenance and making updates, 
and enhancing or updating any needed security measures. The Departments 
estimate that for each issuer and TPA, it will take a Project Manager/
Team Lead 1,040 hours (at $153 per hour), a Scrum Master 1,300 hours 
(at $105 per hour), an Application Developer, Senior 1,560 hours (at 
$143 per hour), a Business Analyst (at $120.00 per hour) 520 hours, a 
Designer (at $116.00 per hour) 1,040 hours, a DevOps Engineer (at 
$181.00 per hour) 520 hours, a Web Database/Application Developer IV 
(at $152.00 per hour) 1,560 hours, and a UX Researcher/Service Designer 
520 hours (at $154 per hour) to perform these tasks. The total annual 
burden for each issuer or TPA will be 8,060 hours, with an equivalent 
cost of approximately $1,113,060. For all 1,959 issuers and TPAs, the 
total annual maintenance burden is estimated to be 15,789,540 hours, 
with an equivalent associated total cost of approximately 
$2,180,484,540.00. The Departments recognize that issuers and TPAs will 
likely have varying levels of IT capabilities and experience in 
maintaining and internet-based tool and could incur higher or lower 
costs and burdens depending on those capabilities. The Departments 
expect maintenance costs to decline in succeeding years as issuers and 
TPAs gain efficiencies and experience in updating and managing their 
internet-based self-service tool.

  Table 7A--Estimated Annual Cost and Hour Burden for Maintenance of Internet-Based Self-Service Tool for Each
                                                  Issuer or TPA
----------------------------------------------------------------------------------------------------------------
                                                                 Burden hours   Labor cost  per   Total cost per
                          Occupation                            per respondent        hour          respondent
----------------------------------------------------------------------------------------------------------------
Project Manager/Team Lead....................................            1,040          $153.00      $159,120.00
Scrum Master.................................................            1,300           105.00       136,500.00
Application Developer, Senior................................            1,560           143.00       223,080.00
Business Analyst.............................................              520           120.00        62,400.00
Designer.....................................................            1,040           116.00       120,640.00
DevOps Engineer..............................................              520           181.00        94,120.00
Web Database/Application Developer IV........................            1,560           152.00       237,120.00
UX Researcher/Service Designer...............................              520           154.00        80,080.00
                                                              --------------------------------------------------
    Total per Respondent.....................................            8,060  ...............     1,113,060.00
----------------------------------------------------------------------------------------------------------------


   Table 7B--Estimated Annual Cost and Hour Burden for Maintenance of Internet-Based Self-Service Tool for All
                                                Issuers and TPAs
----------------------------------------------------------------------------------------------------------------
                                               Burden hours per
Number of respondents   Number of responses       respondent        Total burden hours          Total cost
----------------------------------------------------------------------------------------------------------------
             1,959                  1,959               8,060.0            15,789,540        $2,180,484,540.00
----------------------------------------------------------------------------------------------------------------


[[Page 72280]]

    As noted previously in this ICR section, commenters stated that the 
Departments grossly underestimated the cost burden of implementation on 
plans and issuers. Additionally, commenters stated that the Departments 
had underestimated the maintenance costs associated with the internet-
based self-service tool. Issuers estimated the annual maintenance costs 
to be on average, about $3.78 million per issuer or TPA (ranging from 
$375,000 to $10,000,000). As noted previously in this ICR section, 
based on comments received, the Departments have adjusted the costs and 
burden estimates to better reflect and align with the values submitted 
by commenters. The Departments estimate the high-end three-year average 
total hour burden, for all issuers and TPAs to develop, build, and 
maintain an internet-based self-service tool will be 45,670,820 hours 
annually, with an average annual total equivalent cost of 
$6,388,837,830.
    The Departments acknowledge that the costs described earlier in 
this section may vary depending on the number of covered lives and the 
number of providers and items and services incorporated into the 
internet-based self-service tool. Recognizing that many issuers and 
TPAs currently have some form of internet-based self-service tool in 
operation that meets some aspects of the requirements of the final 
rules, the Departments estimate the low-end average three-year annual 
total burden, for all issuers and TPAs to develop, build, and maintain 
an internet-based self-service tool will be 30,268,378 hours annually, 
with an average annual total equivalent cost of $4,210,248,035. The 
Departments recognize that plans, issuers, and TPAs may be able to 
license existing internet-based self-service tools offered by vendors, 
obviating the need to establish, upgrade, and maintain their own 
internet-based self-service tools, and that vendor licensing fees, 
dependent upon complexity, volume, and frequency of use, could be lower 
than the burden and costs estimated here.

  Table 8--Estimated High-End Three Year Average Annual Hour Burden and Costs for All Issuers and TPAs To Develop and Maintain the Internet-Based Self-
                                                                      Service Tool
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                 Estimated
                                                             number of health                       Burden per       Total annual      Total estimated
                            Year                                 insurance         Responses        respondent      burden  (hours)       labor cost
                                                             issuers and TPAs                         (hours)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2022.......................................................             1,959             1,959          37,440.0        73,344,960      $10,374,237,120
2023.......................................................             1,959             1,959          24,440.0        47,877,960     6,611,791,830.97
2024.......................................................             1,959             1,959           8,060.0        15,789,540     2,180,484,540.00
3 year Average.............................................             1,959             1,959            23,313        45,670,820     6,388,837,830.32
--------------------------------------------------------------------------------------------------------------------------------------------------------


  Table 9--Estimated Low-End Three Year Average Annual Hour Burden and Costs for All Issuers and TPAs to Develop and Maintain the Internet-Based Self-
                                                                      Service Tool
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                 Estimated
                                                             number of health                       Burden per       Total annual      Total estimated
                            Year                                 insurance         Responses        respondent      burden  (hours)       labor cost
                                                             issuers and TPAs                         (hours)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2022.......................................................             1,959             1,959            13,853        27,137,635    $3,838,467,734.40
2023.......................................................             1,959             1,959            24,440        47,877,960     6,611,791,830.97
2024.......................................................             1,959             1,959             8,060        15,789,540     2,180,484,540.00
3 year Average.............................................             1,959             1,959            15,451        30,268,378     4,210,248,035.12
--------------------------------------------------------------------------------------------------------------------------------------------------------

    In addition to the one-time and annual maintenance costs estimated 
in Table 8 and Table 9, issuers and TPAs will also incur an annual 
burden and costs associated with customer service representative 
training, consumer assistance and education, and administrative and 
distribution costs related to the disclosures required in the final 
rules. The Departments estimate that, to understand and navigate the 
internet-based self-service tool and provide the appropriate assistance 
to consumers, each customer service representative will require 
approximately two hours (at $40 per hour) of annual consumer assistance 
training at an associated cost of $80 per hour. The Departments 
estimate that each issuer and TPA will train, on average, 10 customer 
service representatives annually, resulting in a total annual burden of 
20 hours, with an associated total cost of $800. For all 1,959 issuers 
and TPAs, the total annual burden is estimated to be 39,180 hours, with 
an equivalent total annual cost of approximately $1,567,200. The 
Departments recognize that some issuers or TPAs may require varying 
levels of training to acquaint their customer service representatives 
with the functionalities of their internet-based self-service tool 
depending on the degree of changes required to comply with the final 
rules, in which case some issuers could incur higher costs and burdens 
to appropriately train personnel.

 Table 10A--Estimated Annual Cost and Hour Burden per Issuer or TPA To Train Customer Service Representatives To
                 Provide Assistance to Consumers Related to the Internet-Based Self-Service Tool
----------------------------------------------------------------------------------------------------------------
                                                                 Burden hours   Labor cost  per   Total cost per
                          Occupation                            per respondent        hour          respondent
----------------------------------------------------------------------------------------------------------------
Customer Service Representatives.............................                2           $40.00           $80.00
                                                              --------------------------------------------------
    Total per Respondent.....................................                2  ...............            80.00
----------------------------------------------------------------------------------------------------------------


[[Page 72281]]


       Table 10B--Estimated Annual Cost and Hour Burden for All Issuers and TPAs To Train Customer Service
       Representatives To Provide Assistance to Consumers Related to the Internet-Based Self-Service Tool
----------------------------------------------------------------------------------------------------------------
      Number of                                Burden hours  per
     respondents       Number of  responses       respondent        Total burden  hours         Total cost
----------------------------------------------------------------------------------------------------------------
             1,959                  1,959                    20                39,180            $1,567,200.00
----------------------------------------------------------------------------------------------------------------

    The Departments assume that the greatest proportion of 
beneficiaries, participants, or enrollees that will request disclosure 
of cost-sharing information in paper form will do so because they do 
not have access to the internet. However, the Departments acknowledge 
that some consumers with access to the internet will contact a plan or 
issuer for assistance with using the internet-based self-service tool 
and may request to receive cost-sharing information in paper form.
    Recent studies have found that approximately 20 million households 
do not have an internet subscription.\287\ Further, approximately 19 
million Americans (6 percent of the population) lack access to fixed 
broadband services that meet threshold levels.\288\ Additionally, a 
recent Pew Research Center analysis found that 10 percent of U.S. 
adults do not use the internet, citing the following major factors: 
difficulty of use, age, cost of internet services, and lack of computer 
ownership.\289\ Additional research indicates that an increasing 
number, 17 percent, of individuals and households are now considered 
``smartphone only'' and that 37 percent of U.S. adults mostly use 
smartphones to access the internet and that many adults are forgoing 
the use of traditional broadband services.\290\ Further research 
indicates that younger individuals and households, including 
approximately 93 percent of households with householders aged 15 to 34, 
are more likely to have smartphones compared to those aged over 
65.\291\ The Departments are of the view that the population most 
likely to use the internet-based self-service tool would generally 
consist of younger individuals, who are more comfortable using 
technology and are more likely to have internet access via broadband or 
smartphone technologies.
---------------------------------------------------------------------------

    \287\ ``2017 American Community Survey Single-Year Estimates.'' 
United States Census Bureau. September 13, 2018. Available at: 
https://www.census.gov/newsroom/press-kits/2018/acs-1year.html.
    \288\ ``Eight Broadband Progress Report.'' United States Federal 
Communications Commission. December 14, 2018. Available at: https://www.fcc.gov/reports-research/reports/broadband-progress-reports/eighth-broadband-progress-report. In addition to the estimated 19 
million Americans that lack access, they further estimate that ``in 
areas where broadband is available, approximately 100 million 
Americans still do not subscribe.''
    \289\ Anderson, M. et al. ``10% of Americans don't use the 
internet. Who are they?'' Pew Research Center. April 22, 2019. 
Available at: https://www.pewresearch.org/fact-tank/2019/04/22/some-americans-dont-use-the-internet-who-are-they/.
    \290\ Anderson, M. ``Mobile Technology and Home Broadband 
2019.'' Pew Research Center. June 13, 2019. Available at: https://www.pewinternet.org/2019/06/13/mobile-technology-and-home-broadband-2019/ (finding that overall 17 percent of Americans are now 
``smartphone only'' internet users, up from 8 percent in 2013. They 
study also shows that 45 percent of non-broadband users cite their 
smartphones as a reason for not subscribing to high-speed internet).
    \291\ Ryan, C. ``Computer and internet Use in the United States: 
2016.'' American Community Survey Reports: United States Census 
Bureau. August 2018. Available at: https://www.census.gov/content/dam/Census/library/publications/2018/acs/ACS-39.pdf.
---------------------------------------------------------------------------

    The Departments note that there are 212.3 million beneficiaries, 
participants, or enrollees enrolled in group health plans or with 
health insurance issuers required to comply with the requirements of 
the final rules for at least part of the year.\292\ On average, it is 
estimated that each issuer or TPA would annually administer the 
benefits for 108,379 beneficiaries, participants, or enrollees.
---------------------------------------------------------------------------

    \292\ Id. at 283.
---------------------------------------------------------------------------

    A recent study noted that only one to 12 percent of consumers that 
have been offered internet-based or mobile application-based price 
transparency tools use them.\293\ Taking that into account, and 
assuming that six percent of covered individuals lack access to fixed 
broadband services, the Departments estimate that on average six 
percent of participants, beneficiaries, or enrollees will seek customer 
support (a mid-range percentage of individuals that currently use 
available cost estimator tools) and that an estimated one percent of 
those participants, beneficiaries, or enrollees will request any 
pertinent information be disclosed to them in in a non-internet 
manner--resulting in an estimated 0.06 percent of participants, 
beneficiaries, or enrollees requesting information. As discussed in 
section V.D.1 of this preamble, the Departments have adjusted the 
estimates related to customer service and mailed requests in order to 
account for more recent data related to the number of participants, 
beneficiaries, and enrollees. The Departments estimate that each issuer 
or TPA, on average, will require a customer service representative to 
interact with a beneficiary, participant, or enrollee approximately 65 
times per year on matters related to cost-sharing information 
disclosures required by the final rules. The Departments estimate that 
each customer service representative will spend, on average, 15 minutes 
(at $40 per hour) for each interaction, resulting in a cost of 
approximately $10 per interaction. The Departments estimate that each 
issuer or TPA will incur an annual burden of 16 hours, with an 
associated equivalent cost of approximately $650; resulting in a total 
annual burden of 31,847 hours, with an associated cost of approximately 
$1,273,884 for all issuers and TPAs.
---------------------------------------------------------------------------

    \293\ Mehrotra, A., Chernew, M., and Sinaiko, A. ``Health Policy 
Report: Promises and Reality of Price Transparency.'' April 5, 2018. 
14 N. Eng. J. Med. 378. Available at: https://www.nejm.org/doi/full/10.1056/NEJMhpr1715229.
---------------------------------------------------------------------------

    The Departments assume that all beneficiaries, participants, or 
enrollees that contact a customer service representative will request 
non-internet disclosure of the internet-based self-service tool 
information. Of these, the Departments estimate that 54 percent of the 
requested information would be transmitted via email or facsimile at 
negligible cost to the issuer or TPA and that 46 percent will request 
the information be provided by mail. The Departments estimate that, on 
average, each issuer or TPA will send approximately 30 disclosures by 
mail annually. Based on these assumptions, the Departments estimate 
that the total number of annual disclosures sent by mail for all 
issuers and TPAs will be 58,599. The Departments recognize that the 
numbers of per issuer and TPA mailings may represent a low-end estimate 
and the number of requests may vary amongst each issuer or TPA 
depending on the demographics of their beneficiaries, participants, or 
enrollees. The Departments are of the view that although more 
individuals will contact customer support for cost information the vast 
majority of those individuals will likely obtain this information over 
the phone or have it emailed rather than have it mailed to them.
    The Departments assume, on average, the length of the printed 
disclosure will be approximately nine single-sided pages in length, 
assuming two pages of

[[Page 72282]]

information (similar to that provided in an EOB) for three providers 
(for a total of six pages) and an additional three pages related to the 
required notice statements, with a printing cost of $0.05 per page. 
Therefore, including postage costs of $0.55 per mailing, the 
Departments estimate that each issuer or TPA will incur a material and 
printing costs of approximately $1.00 ($0.45 printing plus $0.55 
postage costs) per mailed request. Based on these assumptions, the 
Departments estimate that each issuer or TPA will incur an annual 
printing and mailing cost of approximately $30, resulting in a total 
annual printing and mailing cost of approximately $58,599 for all 
issuers and TPAs.

 Table 11A--Estimated Annual Cost and Hour Burden per Response per Issuer or TPA To Accept and Fulfill Requests
                                            for a Mailed Disclosures
----------------------------------------------------------------------------------------------------------------
                                                                 Burden hours   Labor cost  per   Total cost per
                          Occupation                            per respondent        hour          respondent
----------------------------------------------------------------------------------------------------------------
Customer Service Representatives.............................             0.25           $40.00              $10
                                                              --------------------------------------------------
Total per Respondent.........................................             0.25  ...............               10
----------------------------------------------------------------------------------------------------------------


             Table 11B--Estimated Annual Cost and Hour Burden for All Issuers and TPAs To Accept and Fulfill Requests for Mailed Disclosures
--------------------------------------------------------------------------------------------------------------------------------------------------------
     Number of            Number of        Burden hours  per                          Total labor cost  of       Printing and
    respondents           responses            respondent      Total burden  hours         reporting            materials cost          Total cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
            1,959             1132,509                   16               31,847            $1,273,884.00           $58,598.66           $1,332,482.66
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The Departments solicited comment on the overall estimated costs 
and burdens related to this collection of information request. The 
Departments also sought comment on the technical and labor requirements 
or costs that may be required to meet the requirements of the proposed 
rules: For example, what costs may be associated with any potential 
consolidation of information needed for the internet-based self-service 
tool functionality. The Departments sought comment on the estimated 
number of issuers and TPAs currently in the group and individual 
markets and the number of self-insured group health plans that might 
seek to independently develop an internet-based self-service tool, the 
percentage of consumers who might use the internet-based self-service 
tool, and the percentage of consumers who might contact their plan, 
issuer, or TPA requesting information via a non-internet disclosure 
method. The Departments sought comment on any other existing 
efficiencies that could be leveraged to minimize the burden on plans, 
issuers, and TPAs, as well as how many or what percentage of plans, 
issuers, and TPAs might leverage such efficiencies. The Departments 
sought comment on the proposed model notice and any additional 
information that stakeholders thought should be included, removed, or 
expanded upon and its overall adaptability.
    All comments received with regard the topics above have been noted 
and addressed in their corresponding ICR sections.
    In conjunction with the final rules, CMS is seeking approval for 
this information collection (OMB control number: 0938-1372 
(Transparency in Coverage (CMS-10715)). CMS is requiring the following 
information collections to include the following burden. DOL and the 
Department of the Treasury will submit their burden estimates upon 
approval.
    2. ICRs Regarding Requirements for Public Disclosure of In-network 
Rates, Historical Allowed Amount Data for Covered Items and Services 
from Out-of-Network Providers and Prescription Drug Pricing Information 
under 26 CFR 54.9815-2715A3, 29 CFR 2590.715-2715A3, and 45 CFR 
147.212.
    The Departments are adding 26 CFR 54.9815-2715A3(b), 29 CFR 
2590.715-2715A3(b), and 45 CFR 147.212(b) to the final rules requiring 
group health plans and health insurance issuers to make public in-
network rates for covered items and services, out-of-network allowed 
amounts for covered items or services, and negotiated rates and 
historical net prices for each prescription drug NDC through three 
machine-readable files that must conform to guidance issued by the 
Departments. The list of required data elements that must be included 
for each file for each covered item or service are discussed in section 
II.C previously in this preamble and enumerated under paragraph 
(b)(1)(i) for the In-network Rate File, paragraph (b)(1)(ii) for the 
Allowed Amount File, and paragraph (b)(1)(iii) for the Prescription 
Drug File of the final rules. Under paragraphs (b)(2) and (3) of the 
final rules, the machine-readable files must be posted on a public 
internet site accessible to any person free of charge and without 
conditions and must be updated monthly.
    For the In-network Rate File, the final rules require the 
negotiated rates, underlying fee schedules, or derived amounts under a 
plan or coverage regarding each covered item or service be furnished 
for in-network providers. As discussed in section II.C earlier in this 
preamble, the Departments expect plans and issuers to make public the 
negotiated rate, fee schedule, or derived amount that is used to 
adjudicate claims for the purpose of reconciling a provider's payment 
to determine a participant's, beneficiary's, or enrollee's cost-sharing 
liability. As discussed in the previous ICR section, the Departments 
assume fully-insured group health plans will rely on issuers and most 
self-insured group health plans will rely on issuers or TPAs to develop 
and update the machine-readable files. The Departments recognize that 
there may be some self-insured plans that wish to individually comply 
with the final rules and will thus incur a similar burden and cost as 
described in the following paragraphs.
    Many commenters stated the costs associated with the technical 
build and maintenance of the machine-readable files will be 
significant, and many commenters strongly suggested that the costs and 
burden of implementing the files would be significantly higher than 
those estimated in the proposed rules. Some commenters stated that the 
final rules would unreasonably burden

[[Page 72283]]

issuers with administrative costs and could be especially burdensome 
for small issuers and self-insured plans. One commenter noted that a 
significant amount of burden would be placed on out-of-network 
providers to provide information regarding costs to plans and issuers. 
Another commenter, a hospital association, stated that the proposed 
rules would be an administrative burden for hospitals as they would 
require a massive investment by hospitals to provide data to comply and 
that these resources would be diverted from patient care support.
    The Departments recognize that the requirements in the final rules 
could result in instances where small issuers and self-insured plans 
face a disproportionate burden due to their size; however, as noted 
earlier in this preamble, the Departments expect that small issuers, 
plans, and TPAs will combine their efforts and seek to take advantage 
of any resulting economies of scale.
    An independent study by Bates White Economic Consulting (Bates 
White), commissioned by one commenter, developed an assessment of the 
costs of the proposed rules by interviewing a mix of 18 large and small 
health insurance issuers covering about 78 million lives; Bates White 
assessed the average issuer cost to implement the In-network Rate File 
as $2,139,167 with a range from $85,000 to $10,000,000. Bates White 
reported that commercial issuers estimated an average cost of $2.1 
million per issuer to develop and implement the In-network Rates File. 
Per the study, issuers view the In-network Rate File as about 20 times 
costlier to implement than the Departments' proposed estimate. In 
addition, Bates White assessed the average annual issuer cost to 
maintain the In-network Rate Files would be $467,000 with a range from 
$15,000 to $1,000,000. Another commenter noted that commercial issuers 
estimated annual costs of $600,000 per issuer to maintain the In-
network Rate File. Issuers viewed the In-network Rate File as about 13 
times costlier to maintain than the Departments' proposed estimate.
    In another attempt to quantify this burden, one commenter 
emphasized that the potential universe of prices that would need to be 
disclosed on the files is enormous and could be in the hundreds of 
billions (more than 94,000 codes multiplied by the number of unique 
practitioners, which in the large issuer's system alone could exceed 2 
million).
    One commenter noted that the effort to comply would involve an 
immense amount of data aggregation, de-identification, and application 
development work, and these tasks would be especially difficult for 
small issuers and self-insured plans who are more likely to rely on 
``rented'' networks. The commenter stated that to comply with the final 
rules, issuers would need a team with data expertise and knowledge of 
plan design and medical service billing to aggregate data, build re-
pricing engines, and assure accuracy.
    Due to the belief that the burden estimate in the proposed rules 
and related PRA grossly underestimated the burden of implementation on 
plans and issuers, one commenter suggested the Departments should 
retract the PRA and work with stakeholders to develop a less burdensome 
transparency solution. Other commenters stated the burden estimates 
included in the proposed rules violate the spirit and express provision 
of the PRA.
    The Departments recognize the concerns and issues noted by 
commenters. As noted in section VI.A in this preamble, the Departments 
have reviewed comments related to the costs and burdens associated with 
the requirements of the final rules and devised updated estimates using 
CALC derived wage rates. The Departments note that the conclusions of 
the Bates White study referenced earlier in this preamble were based on 
interviews with issuers in which issuers described the steps they 
viewed as necessary to establish the required internet-based self-
service tool and the machine-readable files, and provided related costs 
estimates associated with the estimated initial set-up of the internet-
based self-service tool and machine-readable files. These estimates, 
however, did not provide the level of detail necessary for the 
Departments to assess how those initial cost estimates differ from the 
Departments' estimates.
    The Bates White study also recognized the difficulty associated 
with assessing issuer estimates reported from issuer study 
participants. The study recognized that issuers interviewed varied 
widely in size, had different levels of experience, and had engaged in 
different levels of analysis of the impacts in the proposed rules. The 
study further noted the differences in the extent to which issuers 
evaluated the costs and feasibility of complying with the proposed 
rules. The study also recognized that issuers interviewed made 
different assumptions about the degree of support from vendors or trade 
associations that may have affected issuers' perception of the 
administrative and operational costs of implementation, and that 
issuers did not provide details of the varied operational and 
implementation costs and activities underlying their stated estimates 
for complying with the proposed rules. Specifically, the study provided 
no insight regarding the labor categories, wages, or hourly burdens 
that were considered to produce these cost estimates. Accordingly, the 
Bates White study did not provide details sufficient to allow those 
estimates to be compared to the Departments' estimates in the proposed 
rules.
    Given the limited utility of information offered by the Bates White 
study, the Departments took additional steps to ensure the 
reasonableness and accuracy of the cost estimates associated with 
compliance with the final rules. In developing the updated estimates, 
the Departments took into account the potential aggregation of data and 
the potential likelihood that the data required to meet the 
requirements of the final rules would need to be obtained from multiple 
sources. The Departments recognize that the size and complexity of the 
machine-readable files will result in data files that are large. 
However, the Departments do not anticipate that data storage would 
impose a significant burden for issuers or TPAs due to the relatively 
inexpensive costs associated with storage methods such as cloud 
storage.
    The Departments estimate a one-time first year burden and cost to 
issuers and TPAs to make appropriate changes to IT systems and 
processes, to develop, implement and operate the In-network Rate File 
in order to meet the requirements of the final rules. The Departments 
estimate that each health or TPA will require a Project Manager/Team 
Lead 364 hours (at $153 per hour), a Scrum Master 1,404 hours (at $105 
per hour), a Technical Architect/Sr. Developer 2,080 hours (at $149 per 
hour), an Application Developer, Senior 1,716 hours (at $143 per hour), 
a Business Analyst 1,404 hours (at $120 per hour), a Service Designer/
Researcher 520 hours (at $114 per hour) and a DevOps Engineer 260 hours 
(at $181 per hour) to complete this task. The total one-time first year 
burden for each issuer or TPA is estimated to be approximately 7,748 
hours, with an equivalent associated cost of approximately $1,033,240. 
For all 1,959 issuers and TPAs, the Departments estimate the total one-
time first year burden will be 15,178,332 hours with an associated cost 
of approximately $2,024,117,160. The Departments emphasize that these 
are upper bound estimates that are meant to be sufficient to cover 
substantial, complex activities

[[Page 72284]]

that may be necessary for some plans, issuers, or TPAs to comply with 
the final rules due to the manner in which their current systems are 
designed. Such activities may include such significant activities as 
the design and implementation of databases that will support the 
production of the In-network Rate Files.

   Table 12A--Estimated One-Time Year One Cost and Hour Burden per Issuer or TPA for the In-Network Rate File
----------------------------------------------------------------------------------------------------------------
                                                                 Burden hours   Labor cost  per   Total cost per
                          Occupation                            per respondent        hour          respondent
----------------------------------------------------------------------------------------------------------------
Project Manager/Team Lead....................................              364          $153.00       $55,692.00
Scrum Master.................................................            1,404           105.00       147,420.00
Technical Architect/Sr. Developer............................            2,080           149.00       309,920.00
Application Developer, Senior................................            1,716           143.00       245,388.00
Business Analyst.............................................            1,404           120.00       168,480.00
Service Designer/Researcher..................................              520           114.00        59,280.00
DevOps Engineer..............................................              260           181.00        47,060.00
                                                              --------------------------------------------------
    Total per Respondent.....................................            7,748  ...............     1,033,240.00
----------------------------------------------------------------------------------------------------------------


  Table 12B--Estimated One-Time Year One Cost and Hour Burden for All Issuers and TPAs for the In-network Rate
                                                      File
----------------------------------------------------------------------------------------------------------------
      Number of                                Burden hours  per
     respondents       Number of  responses       respondent        Total burden  hours         Total cost
----------------------------------------------------------------------------------------------------------------
             1,959                  1,959                 7,748            15,178,332        $2,024,117,160.00
----------------------------------------------------------------------------------------------------------------

    In addition to the one-time year one costs estimated in Tables 12A 
and 12B, issuers or TPAs will incur an additional year two burden and 
cost to update the In-network Rate File monthly as required in the 
final rules. The Departments estimate that for each month each issuer 
or TPA it will require a Project Manager/Team Lead 22 hours (at $153 
per hour), a Scrum Master 22 hours (at $105 per hour), a Technical 
Architect/Sr. Developer 22 hours (at $149 per hour), an Application 
Developer, Senior 22 hours (at $143 per hour), a Business Analyst 13 
hours (at $120 per hour) and a DevOps Engineer 22 hours (at $181 per 
hour) to make the required updates and needed adjustments to the In-
network Rate File. The Departments estimate that each issuer or TPA 
will incur a monthly year two burden of 123 hours, with an associated 
monthly cost of approximately $17,642 to adjust and update the In-
network Rate File. Each issuer or TPA will need to update the In-
network Rate File 12 times during a given year, resulting in a year two 
burden of 1,476 hours, with an associated equivalent cost of 
approximately $211,704. The Departments estimate the total year two 
burden for all 1,959 issuers and TPAs will be 2,891,484 hours, with an 
associated equivalent cost of approximately $414,728,136. The 
Departments consider this estimate to be an upper-bound estimate and 
expect ongoing update costs to decline in succeeding years as issuers 
and TPAs gain efficiencies and experience in updating and managing the 
In-network Rate File.

    Table 13A--Estimated Monthly Year Two Cost and Hour Burden per Issuer or TPA for the In-network Rate File
----------------------------------------------------------------------------------------------------------------
                                                                 Burden hours   Labor cost  per   Total cost per
                          Occupation                            per respondent        hour          respondent
----------------------------------------------------------------------------------------------------------------
Project Manager/Team Lead....................................               22          $153.00        $3,366.00
Scrum Master.................................................               22           105.00         2,310.00
Technical Architect/Sr. Developer............................               22           149.00         3,278.00
Application Developer, Senior................................               22           143.00         3,146.00
Business Analyst.............................................               13           120.00         1,560.00
DevOps Engineer..............................................               22           181.00         3,982.00
                                                              --------------------------------------------------
    Total per Respondent.....................................              123  ...............        17,642.00
----------------------------------------------------------------------------------------------------------------


    Table 13B--Estimated Year Two Cost and Hour Burden for All Issuers and TPAs for the In-network Rate File
----------------------------------------------------------------------------------------------------------------
      Number of                                Burden hours  per
     respondents       Number of  responses       respondent        Total burden  hours         Total cost
----------------------------------------------------------------------------------------------------------------
             1,959                 23,508                 1,476             2,891,484          $414,728,136.00
----------------------------------------------------------------------------------------------------------------


[[Page 72285]]

    In addition to the one-time year one and monthly year two costs 
estimated Tables 12A, 12B, 13A, and 13B, in subsequent years, issuers 
and TPAs will incur an ongoing monthly burden and cost to update and 
maintain the In-network Rate File on a monthly basis as required by the 
final rules. The Departments estimate that for each issuer or TPA it 
will require a Project Manager/Team Lead 9 hours (at $153 per hour) and 
an Application Developer, Senior 22 hours (at $143 per hour) to make 
the required updates to the In-network Rate File. The Departments 
estimate that each issuer or TPA will incur a monthly burden of 31 
hours, with an associated cost of approximately $4,523 to update the 
In-network Rate File. Each issuer or TPA will need to update the In-
network Rate File 12 times during a given year, resulting in an ongoing 
annual hour burden of 372 hours, with an associated equivalent cost of 
approximately $54,276. The Departments estimate the total annual burden 
for all 1,959 issuers and TPAs will be 728,748 hours, with an 
associated equivalent cost of approximately $106,326,684. The 
Departments consider this estimate to be an upper-bound estimate and 
expect ongoing update costs to decline in succeeding years as issuers 
and TPAs gain efficiencies and experience in updating and managing the 
In-network Rate File.

    Table 14A--Estimated Monthly Ongoing Cost and Hour Burden per Issuer or TPA for the In-network Rate File
----------------------------------------------------------------------------------------------------------------
                                                                 Burden hours   Labor cost  per   Total cost per
                          Occupation                            per respondent        hour          respondent
----------------------------------------------------------------------------------------------------------------
Project Manager/Team Lead....................................                9          $153.00        $1,377.00
Application Developer, Senior................................               22           143.00         3,146.00
                                                              --------------------------------------------------
    Total per Respondent.....................................               31  ...............         4,523.00
----------------------------------------------------------------------------------------------------------------


 Table 14B--Estimated Annual Ongoing Cost and Hour Burden for All Issuers and TPAs for the In-Network Rate File
----------------------------------------------------------------------------------------------------------------
      Number of                                Burden hours  per
     respondents       Number of  responses       respondent        Total burden  hours         Total cost
----------------------------------------------------------------------------------------------------------------
             1,959                 23,508                   372               728,748          $106,326,684.00
----------------------------------------------------------------------------------------------------------------

    The Departments estimate the total one-time year one burden for all 
issuers and TPAs will be 15,178,332 hours, with an associated 
equivalent cost of approximately $2,024,117,160 to develop and build 
the In-network Rate File in a machine-readable format. In year two, the 
Departments estimate the burden and costs to update and maintain the 
In-network Rate file for all issuers and TPAs will be 2,891,484 hours, 
with an associated equivalent cost of approximately $414,728,136. In 
subsequent years, the Departments estimate the total annual burden to 
maintain and update the In-network Rate File will be 728,748 hours, 
with an annual associated equivalent cost of approximately 
$106,326,684. The Departments estimate the three-year average annual 
total burden, for all issuers and TPAs, will be 6,266,188 hours, with 
an average annual associated equivalent total cost of $848,390,660.

      Table 15--Estimated Three Year Average Annual Hour Burden and Costs for All Issuers and TPAs To Develop and Maintain the In-Network Rate File
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                 Estimated
                                                             number of health                       Burden per       Total annual      Total estimated
                            Year                                 insurance         Responses        respondent      burden  (hours)       labor cost
                                                             issuers and TPAs                         (hours)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2021.......................................................             1,959             1,959             7,748        15,178,332    $2,024,117,160.00
2022.......................................................             1,959            23,508             1,476         2,891,484       414,728,136.00
2023.......................................................             1,959            23,508               372           728,748       106,326,684.00
3 year Average.............................................             1,959            16,325             3,199         6,266,188       848,390,660.00
--------------------------------------------------------------------------------------------------------------------------------------------------------

    As mentioned in sections V.B in this preamble, the Departments 
understand that plans and issuers may include gag clauses in their 
provider contracting agreements, which prevent disclosure of in-network 
rates. The Departments sought comment on whether such agreements would 
need to be renegotiated to remove such clauses, and, if so, sought 
comment regarding any costs and burden associated with this action.
    One commenter stated the Departments have not sufficiently 
accounted for costs associated with updating legal agreements (with 
physicians, hospitals, drug manufacturers, and device manufacturers, 
for example), updating and integrating data from multiple systems, and 
establishing processes for making updates to files in the ordinary 
course of business. Another commenter observed the Departments have not 
adequately accounted for the time, resources, and cost burdens of 
renegotiating contracts to remove gag clauses or confidentiality 
clauses, which prevent disclosure of in-network rates. One commenter 
provided examples of these costs: Printing and paper, mailing, attorney 
drafting initial amendments and review of non-standard language 
requests, costs for employees charged with negotiation and 
administration, and costs paid to vendors.

[[Page 72286]]

    Due to the potential complexities and time involved in contract 
negotiations, the Departments recognize that should contracts require 
renegotiation, all associated parties will face additional costs and 
burdens. However, the Departments do not have insight into these 
complexities or knowledge of how these contracts are structured, and 
they are thus not able to quantify the costs and burdens associated 
with these tasks. Also, as addressed earlier in this preamble, it is 
not uncommon for new or modified regulatory requirements or new 
statutory provisions to alter private contract arrangements. The 
Departments note that the possibility of new or modified regulatory 
requirements or new statutory provisions altering such contracts often 
is contemplated in the contracts themselves; for example, drafters may 
include contract language indicating that terms may be altered by 
changes in law or regulation. Such language would obviate the need for 
updates outsides of the regular contracting schedule and any associated 
costs and burden.
    For the Allowed Amount File, the final rules require plans and 
issuers to make available a machine-readable file showing the unique 
out-of-network allowed amounts and billed charges for covered items or 
services furnished by out-of-network providers during the 90-day time 
period that begins 180 days before the publication date of the file. As 
discussed earlier in this preamble, to the extent that a group health 
plan or health insurance issuer has paid multiple bills for an item or 
service to a particular out-of-network provider at the same allowed 
amount, the final rules will only require a plan or issuer to list the 
allowed amount once. Additionally, if the plan or issuer would only 
display allowed amounts in connection with 20 or fewer claims for a 
covered item or service for payment to a provider during any relevant 
90-day period, the plan or issuer will not be required to report those 
unique allowed amounts.
    As previously noted, an independent study by Bates White, 
commissioned by one commenter, assessed the average issuer cost to 
implement the Allowed Amount File as $1,071,167 with a range from 
$42,000 to $5,000,000 and estimated the cost to implement the Allowed 
Amount File as about 9 times costlier to implement than the 
Departments' proposed estimate. This commenter also argued that the 
average annual issuer cost to maintain the Allowed Amount File would be 
$643,000 with a range from $12,000 to $1,500,000. Another commenter 
argued that the cost to maintain the Allowed Amount File would be about 
44 times costlier than the Departments' proposed estimate.
    As noted above regarding the In-network Rate File cost and burdens, 
the Departments have devised updated estimates for the Allowed Amounts 
File using CALC derived wage rates. In developing the updated 
estimates, the Departments took into account the potential aggregation 
of data and the potential likelihood that the data required to meet the 
requirements of the final rules would need to be obtained from multiple 
sources.
    The Departments estimate a one-time year one burden and cost to 
issuers and TPAs to make appropriate changes to IT systems and 
processes, to develop, implement, and operate the Allowed Amount File 
in order to meet the requirements of the final rules. The Departments 
estimate that each issuer or TPA will require a Scrum Master 520 hours 
(at $105 per hour), a Technical Architect/Sr. Developer 780 hours (at 
$149 per hour), an Application Developer, Senior 2,080 hours (at $143 
per hour), a Business Analyst 520 hours (at $120 per hour), and a 
DevOps Engineer 260 hours (at $181 per hour) to complete this task. The 
Departments estimate the total one-time first year burden for each 
issuer or TPA will be approximately 4,160 hours, with an equivalent 
associated cost of approximately $577,720. For all 1,959 issuers and 
TPAs, the Departments estimate the total one-time year one burden will 
be 8,149,440 hours, with an equivalent associated cost of approximately 
$1,131,753,480.

    Table 16A--Estimated One-Time Year One Cost and Hour Burden per Issuer or TPA for the Allowed Amount File
----------------------------------------------------------------------------------------------------------------
                                                                 Burden hours   Labor cost  per   Total cost per
                          Occupation                            per respondent        hour          respondent
----------------------------------------------------------------------------------------------------------------
Scrum Master.................................................              520          $105.00       $54,600.00
Technical Architect/Sr. Developer............................              780           149.00       116,220.00
Application Developer, Senior................................            2,080           143.00       297,440.00
Business Analyst.............................................              520           120.00        62,400.00
DevOps Engineer..............................................              260           181.00        47,060.00
                                                              --------------------------------------------------
    Total per Respondent.....................................            4,160  ...............       577,720.00
----------------------------------------------------------------------------------------------------------------


Table 16B--Estimated One-Time Year One Cost and Hour Burden for All Issuers and TPAs for the Allowed Amount File
----------------------------------------------------------------------------------------------------------------
                                               Burden hours per
Number of respondents   Number of responses       respondent        Total burden hours          Total cost
----------------------------------------------------------------------------------------------------------------
             1,959                  1,959                 4,160             8,149,440        $1,131,753,480.00
----------------------------------------------------------------------------------------------------------------

    In addition to the one-time year one costs estimated in Tables 16A 
and 16B, issuers and TPAs will incur additional monthly burdens and 
costs in year two to update the Allowed Amount File. The Departments 
estimate that, in year two, each issuer or TPA will require a Scrum 
Master 9 hours (at $105 per hour), an Application Developer, Senior 22 
hours (at $143 per hour), and a DevOps Engineer 22 hour (at $181) to 
make the required monthly Allowed Amount File updates. The Departments 
estimate that each issuer or TPA will incur a monthly burden of 53 
hours, with an equivalent associated cost of approximately $8,073 to 
update the Allowed Amount File. The Departments estimate that each 
issuer or TPA will need to update the Allowed Amount File 12 times 
during a given year, resulting in a year two annual burden of 
approximately 636 hours, with an equivalent associated cost of

[[Page 72287]]

approximately $96,876. The Departments estimate the total year two 
burden for all 1,959 issuers and TPAs will be 1,245,924 hours, with an 
equivalent associated cost of approximately $189,780,084. The 
Departments consider this estimate to be an upper-bound estimate and 
expect ongoing Allowed Amount File update costs to decline in 
succeeding years as issuers and TPAs gain efficiencies and experience 
in updating and managing the Allowed Amount File.

    Table 17A--Estimated Year Two Monthly Cost and Hour Burden per Issuer or TPA for the Allowed Amount File
----------------------------------------------------------------------------------------------------------------
                                                                 Burden hours   Labor cost  per   Total cost per
                          Occupation                            per respondent        hour          respondent
----------------------------------------------------------------------------------------------------------------
Scrum Master.................................................                9          $105.00          $945.00
Application Developer, Senior................................               22           143.00         3,146.00
DevOps Engineer..............................................               22           181.00         3,982.00
                                                              --------------------------------------------------
    Total per Respondent.....................................               53  ...............         8,073.00
----------------------------------------------------------------------------------------------------------------


     Table 17B--Estimated Year Two Cost and Hour Burden for All Issuers and TPAs for the Allowed Amount File
----------------------------------------------------------------------------------------------------------------
      Number of                                Burden hours  per
     respondents       Number of  responses       respondent        Total burden  hours         Total cost
----------------------------------------------------------------------------------------------------------------
             1,959                 23,508                   636             1,245,924          $189,780,084.00
----------------------------------------------------------------------------------------------------------------

    In addition to the one-time year one, monthly and total year two 
costs estimated in Tables 16A, 16B, 17A and 17B, in subsequent years, 
issuers and TPAs will incur additional ongoing monthly burdens and 
costs to update the required Allowed Amount File. The Departments 
estimate that for each issuer or TPA it will require a Scrum Master 4 
hours (at $105 per hour), and an Application Developer, Senior 9 hours 
(at $143 per hour) to make the required monthly Allowed Amount File 
updates. The Departments estimate that each issuer or TPA will incur a 
monthly burden of 13 hours, with an equivalent associated cost of 
approximately $1,707 to update the Allowed Amount File. The Departments 
estimate that each issuer or TPA will need to update the Allowed Amount 
File 12 times during a given year, resulting in an ongoing annual 
burden of approximately 156 hours, with an equivalent associated cost 
of approximately $20,484. The Departments estimate the total burden for 
all 1,959 issuers and TPAs will be 305,604 hours, with an equivalent 
associated cost of approximately $40,128,156. The Departments consider 
this estimate to be an upper-bound estimate and expect ongoing Allowed 
Amount File update costs to decline in succeeding years as issuers and 
TPAs gain efficiencies and experience in updating and managing the 
Allowed Amount File.

     Table 18A--Estimated Monthly Ongoing Cost and Hour Burden per Issuer or TPA for the Allowed Amount File
----------------------------------------------------------------------------------------------------------------
                                                                 Burden hours   Labor cost  per   Total cost per
                          Occupation                            per respondent        hour          respondent
----------------------------------------------------------------------------------------------------------------
Scrum Master.................................................                4          $105.00          $420.00
Application Developer, Senior................................                9           143.00         1,287.00
                                                              --------------------------------------------------
    Total per Respondent.....................................               13  ...............         1,707.00
----------------------------------------------------------------------------------------------------------------


  Table 18B--Estimated Annual Ongoing Cost and Hour Burden for All Issuers and TPAs for the Allowed Amount File
----------------------------------------------------------------------------------------------------------------
      Number of                                Burden hours  per
     respondents       Number of  responses       respondent        Total burden  hours         Total cost
----------------------------------------------------------------------------------------------------------------
             1,959                 23,508                   156               305,604           $40,128,156.00
----------------------------------------------------------------------------------------------------------------

    The Departments estimate the one-time year one burden for all 
issuers and TPAs will be 8,149,440 hours, with an equivalent associated 
cost of approximately $1,131,753,480 to develop and build the Allowed 
Amount File to meet the requirements of the final rules. In year two, 
the Departments estimate the total annual burden of 1,245,924 hours to 
maintain and update the Allowed Amount File, with an equivalent 
associated cost of approximately $189,780,084. In subsequent years, the 
Departments estimate the total annual burden to maintain and update the 
Allowed Amount File will be 305,604 hours, with an annual equivalent 
associated cost of approximately $40,128,156. The Departments estimate 
the three-year average annual total burden for all issuers and TPAs 
will be 3,233,656 hours, with an average annual total

[[Page 72288]]

equivalent associated cost of approximately $453,887,240.

      Table 19--Estimated Three Year Average Annual Hour Burden and Costs for All Issuers and TPAs To Develop and Maintain the Allowed Amount File
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Estimated number                       Burden per
                            Year                              of issuers and       Responses        respondent       Total annual      Total estimated
                                                                   TPAs                               (hours)       burden (hours)        labor cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
2021.......................................................             1,959             1,959             4,160         8,149,440    $1,131,753,480.00
2022.......................................................             1,959            23,508               636         1,245,924       189,780,084.00
2023.......................................................             1,959            23,508               156           305,604        40,128,156.00
3 year Average.............................................             1,959            16,325             1,651         3,233,656       453,887,240.00
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The Departments sought comment for this collection of information 
request related to all aspects of the estimated burdens and costs. 
Specifically, the Departments sought comments related to any technical 
or operational difficulties associated with maintaining current and up-
to-date provider network information or any out-of-network allowed 
amounts for covered items and services. The Departments also sought 
comments related to the technical and labor requirements or costs that 
may be required to meet the requirements in the final rules; 
specifically, any factors that could minimize the frequency of updates 
that issuers or TPAs would be required to make to the Allowed Amount 
File.
    The Departments also solicited comments for this collection of 
information request related to all aspects of the estimated burdens and 
costs. Specifically, the Departments sought comments related to any 
technical or operational difficulties associated with collecting data 
and maintaining any out-of-network allowed amounts for covered items 
and services, including, any difficulties associated with the 
adjudication of paid claims and incorporating covered items or services 
furnished by a particular out-of-network provider during the 90-day 
time period that begins 180 days prior to the publication date of the 
Allowed Amount File. The Departments also sought comments related to 
the technical and labor requirements or costs that may be required to 
meet the requirements in the proposed rules: Specifically, any factors 
that could minimize the burdens and costs associated with updates that 
issuers or TPAs would be required to make to the Allowed Amount File.
    As addressed in section II.C in this preamble, the use of a HIPAA-
compliant clearinghouse is permitted, but not required, in order to 
make the required information public. Plans and issuers are permitted 
to use HIPAA-compliant clearinghouses to meet the disclosure 
requirements and the Departments anticipate they may do so if this 
method is more efficient and cost-effective.
    The Departments acknowledge that as many as 95 percent of group 
health plans and health insurance issuers may already contract with 
claims clearinghouses that currently collect some or all of the 
information required to be disclosed under the final rules and might be 
able to meet the requirements in the final rules easily, potentially 
obviating the need for the plan, issuer, or TPA to invest in IT system 
development. The Departments assume that these plans, issuers, and TPAs 
will still incur burdens and costs, albeit reduced, related to 
oversight and quality assurance regarding any associated clearinghouse 
activities. The Departments sought comments on existing efficiencies, 
such as the use of clearinghouses that could be leveraged by plans, 
issuers, and TPAs related to the development and updating of the 
required machine-readable files and how many issuers, TPAs, or self-
insured plans may already contract with clearinghouses that collect the 
information required. Comments received are discussed earlier in the 
Use of Third Parties to Satisfy Public Disclosure Requirements section 
of this preamble.
    For the Prescription Drug File, the Departments estimate one-time 
first-year burdens and costs to issuers and TPAs to make appropriate 
changes to IT systems and processes to develop, implement, and operate 
the Prescription Drug File in order to meet the requirements in the 
final rules. The Departments estimate that each issuer or TPA will 
require a Project Manager/Team Lead 260 hours (at $153 per hour), a 
Scrum Master 260 hours (at $105 per hour), an Application Developer, 
Senior 520 hours (at $143 per hour), a Business Analyst 520 hours (at 
$120 per hour), and a DevOps Engineer 260 hours (at $181 per hour) to 
complete this task. The total one-time first year burden for each 
issuer or TPA is estimated to be approximately 1,820 hours, with an 
equivalent associated cost of approximately $250,900. For all 1,959 
issuers and TPAs, the Departments estimate the total one-time first 
year burden will be 3,565,380 hours, with an associated estimated cost 
of approximately $491,513,100. The Departments emphasize that these are 
upper bound estimates that are meant to be sufficient to cover 
substantial, complex activities that may be necessary for some plans 
and issuers to comply with the final rules due to the manner in which 
their current systems are designed. Such activities may include such 
significant activity as the design and implementation of databases that 
will support the production of the Prescription Drug File.

  Table 20A--Estimated One-Time Year One Cost and Hour Burden per Issuer or TPA for the Prescription Drug File
----------------------------------------------------------------------------------------------------------------
                                                                 Burden hours   Labor cost  per   Total cost per
                          Occupation                            per respondent        hour          respondent
----------------------------------------------------------------------------------------------------------------
Project Manager/Team Lead....................................              260          $153.00       $39,780.00
Scrum Master.................................................              260           105.00        27,300.00
Application Developer, Senior................................              520           143.00        74,360.00
Business Analyst.............................................              520           120.00        62,400.00

[[Page 72289]]

 
DevOps Engineer..............................................              260           181.00        47,060.00
                                                              --------------------------------------------------
    Total per Respondent.....................................            1,820  ...............       250,900.00
----------------------------------------------------------------------------------------------------------------


 Table 20B--Estimated One-Time Year One Cost and Hour Burden for All Issuers and TPAs for the Prescription Drug
                                                      File
----------------------------------------------------------------------------------------------------------------
                                               Burden hours per
Number of respondents   Number of responses       respondent        Total burden hours          Total cost
----------------------------------------------------------------------------------------------------------------
             1,959                  1,959                 1,820             3,565,380          $491,513,100.00
----------------------------------------------------------------------------------------------------------------

    In addition to the one-time year one costs estimated in Tables 20A 
and 20B, issuers and TPAs will incur additional year two burdens and 
costs to update the required Prescription Drug File monthly. The 
Departments estimate that for each month, each issuer or TPA will 
require a Project Manager/Team Lead 22 hours (at $153 per hour), an 
Application Developer, Senior 22 hours (at $143 per hour), a Business 
Analyst 9 hours (at $120 per hour) and a DevOps Engineer 22 hours (at 
$181 per hour) to make the required updates and needed adjustments to 
the Prescription Drug File. The Departments estimate that each issuer 
or TPA will incur a monthly, year two, burden of 75 hours, with an 
associated monthly cost of approximately $11,574 to update the 
Prescription Drug File. Each issuer or TPA will need to update the 
Prescription Drug File 12 times during a given year, resulting in a 
year two burden of 900 hours, with an associated equivalent cost of 
approximately $138,888. The Departments estimate the total year two 
burden for all 1,959 issuers and TPAs will be 1,763,100 hours, with an 
associated equivalent cost of approximately $272,081,592. The 
Departments consider this estimate to be an upper-bound estimate and 
expect ongoing update costs to decline in succeeding years as issuers 
and TPAs gain efficiencies and experience in updating and managing the 
Prescription Drug File.

   Table 21A--Estimated Monthly Year Two Cost and Hour Burden per Issuer or TPA for the Prescription Drug File
----------------------------------------------------------------------------------------------------------------
                                                                 Burden hours   Labor cost  per   Total cost per
                          Occupation                            per respondent        hour          respondent
----------------------------------------------------------------------------------------------------------------
Project Manager/Team Lead....................................               22          $153.00        $3,366.00
Application Developer, Senior................................               22           143.00         3,146.00
Business Analyst.............................................                9           120.00         1,080.00
DevOps Engineer..............................................               22           181.00         3,982.00
                                                              --------------------------------------------------
    Total per Respondent.....................................               75  ...............        11,574.00
----------------------------------------------------------------------------------------------------------------


   Table 21B--Estimated Year Two Cost and Hour Burden for All Issuers and TPAs for the Prescription Drug File
----------------------------------------------------------------------------------------------------------------
                                               Burden hours per
Number of respondents   Number of responses       respondent        Total burden hours          Total cost
----------------------------------------------------------------------------------------------------------------
             1,959                 23,508                   900             1,763,100          $272,081,592.00
----------------------------------------------------------------------------------------------------------------

    In addition to the one-time year one and monthly year two costs 
estimated in Tables 20A, 20B, 21A and 21B, in subsequent years, issuers 
and TPAs will incur ongoing monthly burdens and costs to update and 
maintain the Prescription Drug File on a monthly basis. The Departments 
estimate that each issuer or TPA will require a Scrum Master 9 hours 
(at $153 per hour) and an Application Developer, Senior 22 hours (at 
$143 per hour) to make the required updates to the Prescription Drug 
File. The Departments estimate that each issuer or TPA will incur a 
monthly burden of 31 hours, with an associated cost of approximately 
$4,523, to update the Prescription Drug File. An issuer or TPA will 
need to update the Prescription Drug File 12 times during a given year, 
resulting in an ongoing annual burden of 372 hours, with an associated 
equivalent cost of approximately $54,276. The Departments estimate the 
total annual burden for all 1,959 issuers and TPAs will be 728,748 
hours, with an associated equivalent cost of approximately 
$106,326,680. The Departments consider this estimate to be an upper-
bound estimate and expect ongoing update costs to decline in succeeding 
years as issuers and TPAs gain efficiencies and experience in updating 
and managing Prescription Drug File.

[[Page 72290]]



   Table 22A--Estimated Monthly Ongoing Cost and Hour Burden per Issuer or TPA for the Prescription Drug File
----------------------------------------------------------------------------------------------------------------
                                                                 Burden hours   Labor cost  per   Total cost per
                          Occupation                            per respondent        hour          respondent
----------------------------------------------------------------------------------------------------------------
Scrum Master.................................................                9          $153.00        $1,377.00
Application Developer, Senior................................               22           143.00         3,146.00
                                                              --------------------------------------------------
    Total per Respondent.....................................               31  ...............         4,523.00
----------------------------------------------------------------------------------------------------------------


Table 22B--Estimated Annual Ongoing Cost and Hour Burden for All Issuers and TPAs for the Prescription Drug File
----------------------------------------------------------------------------------------------------------------
                                               Burden hours per
Number of respondents   Number of responses       respondent        Total burden hours          Total cost
----------------------------------------------------------------------------------------------------------------
             1,959                 23,508                   372               728,748          $106,326,684.00
----------------------------------------------------------------------------------------------------------------

    The Departments estimate the total one-time year one burden for all 
issuers and TPAs will be 3,565,380 hours, with an associated equivalent 
cost of approximately $491,513,100 to develop and build the 
Prescription Drug File in a machine-readable format. In year two, the 
Departments estimate the burden and costs to update and maintain the 
Prescription Drug File, on a monthly basis, for all issuers and TPAs to 
be 1,763,100 hours, with an associated equivalent cost of approximately 
$272,081,592. In subsequent years, the Departments estimate the total 
annual burden of 728,748 hours to maintain and update the Prescription 
Drug File, with an annual associated equivalent cost of approximately 
$106,326,684. The Departments estimate the three-year average annual 
total burden, for all issuers and TPAs, will be 2,019,076 hours with an 
average annual associated equivalent total cost of $289,973,792.

     Table 23--Estimated Three Year Average Annual Hour Burden and Costs for All Issuers and TPAs To Develop and Maintain the Prescription Drug File
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         Estimated number                       Burden per
                          Year                            of issuers and       Responses        respondent       Total annual     Total estimated labor
                                                               TPAs                               (hours)       burden  (hours)            cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
2021...................................................             1,959             1,959             1,820         3,565,380          $491,513,100.00
2022...................................................             1,959            23,508               900         1,763,100           272,081,592.00
2023...................................................             1,959            23,508               372           728,748           106,326,684.00
3 year Average.........................................             1,959            16,325             1,031         2,019,076           289,973,792.00
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Due to comments received in response to the proposed rules, the 
Departments have made changes to the final rules and the ICR sections 
discussed above. The Departments seek comment regarding the changes 
associated with these ICR sections. The Departments also seek comment 
on the use of the CALC database, as discussed in section VI.A, to 
determine occupational descriptions and hourly wage rates. The 
Departments seek comment on the revised costs and burdens discussed in 
section VI.A.1 as they relate to the required internet-based self-
service tool. The Departments also seek comment on model language 
developed by the Departments, as discussed in section II.B.1.g of this 
preamble, to meet the requirements of the final rule. The Departments 
also seek comment on the revised costs and burdens, as discussed in 
section VI.A.2, related to the requirements for the public disclosure 
of In-network Rate, Allowed Amount, and Prescription Drug Files. 
Additionally, the Departments seek comment on the data element changes 
associated with those collection instruments. For the In-network Rate 
File, the Departments seek comment regarding the data elements added to 
the collection instrument; specifically, addition of data elements 
including the TIN, Place of service code, derived amount, underlying 
fee schedule rates, payment arrangement indicator, the use of base 
negotiated rates (for certain reimbursement models), and other data 
elements discussed in section C.1.c of this preamble. The Departments 
also seek comment on the Allowed Amount File regarding the addition of 
data elements including the TIN, NPI, and billed charges associated 
with allowed amounts. The Departments seek comment on all data elements 
discussed in section C.1.c of this preamble as they relate to the 
Prescription Drug File, as well as the estimated costs and burdens 
estimated above.
    In association with amendments made to the final rules, CMS is 
seeking OMB approval for the information collection requirements 
associated with OMB control number 0938-1372 (CMS-10715--Transparency 
in Coverage). Comments will be solicited through a 60-day Federal 
Register notice, in accordance with Section 3506(c)(2)(A) of the 
Paperwork Reduction Act. Data collection requirements associated with 
the internet-based self-service tool, In-network Rate, Allowed Amount, 
and Prescription Drug Files will not be effective until OMB approval is 
sought. The Department of Labor and the Department of the Treasury will 
submit their burden estimates upon approval.
2. ICRs Regarding Medical Loss Ratio (45 CFR 158.221)
    HHS is finalizing its proposal to amend 45 CFR 158.221(b) to allow 
health insurance issuers offering group or individual health insurance 
coverage to include in the MLR numerator ``shared savings'' payments 
made to

[[Page 72291]]

enrollees as a result of the enrollee choosing to obtain health care 
from a lower-cost, higher-value provider. HHS does not anticipate that 
implementing this provision will require significant changes to the MLR 
Annual Reporting Form or will significantly change the associated 
burden. The burden related to this collection is currently approved 
under OMB Control Number 0938-1164 (Exp. 10/31/2020); Medical Loss 
Ratio Annual Reports, MLR Notices, and Recordkeeping Requirements (CMS-
10418).
3. Summary of Annual Burden Estimates for Requirements

                             Table 24--Estimated Three Year Average Proposed Annual Recordkeeping and Reporting Requirements
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                             Total
                                   OMB  control     Number of    Number of    Burden per     annual      Labor cost of      Mailing
     Regulation section(s)            number       respondents   responses     response      burden      reporting ($)      cost ($)     Total cost ($)
                                                                               (hours)      (hours)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sec.  Sec.   54.9815-            0938-1372*              1,959        1,959       23,313   45,670,820  $6,388,837,830.32           $0  $6,388,837,830.32
 2715A2(b)(2)(i); 2590.715-
 2715A2(b)(2)(i); and
 147.211(b)(2)(i).
Sec.  Sec.   54.9815-            0938-1372               1,306       84,926           11       21,231         849,256.00    39,065.78         888,321.78
 2715A2(b)(2)(ii); 2590.715-
 2715A2(b)(2)(ii); and
 147.211(b)(2)(ii).
Sec.  Sec.   54.9815-            0938-1372               1,959       16,325        3,199    6,266,188     848,390,660.00            0     848,390,660.00
 2715A3(b)(i); 2590.715-
 2715A3(b)(i); and
 147.212(b)(1)(i).
Sec.  Sec.   54.9815-            0938-1372               1,959       16,325        1,651    3,233,656     453,887,240.00            0     453,887,240.00
 2715A3(b)(1)(ii); 2590.715-
 2715A3(b)(1)(ii); and
 147.212(b)(1)(ii).
Sec.  Sec.   54.9815-            0938-1372               1,959       16,325        1,031    2,019,076     289,973,792.00            0     289,973,792.00
 2715A3(b)(1)(iii); 2590.715-
 2715A3(b)(1)(iii); and
 147.212(b)(1)(iii).
    Total......................  ................  ...........      135,860       29,204   57,210,971   7,981,938,778.32    39,065.78   7,981,977,844.10
--------------------------------------------------------------------------------------------------------------------------------------------------------
* High-end three year estimated values are represented in the table and used to determine the overall estimated 3-year average.

    For PRA purposes, the Departments are splitting the burden: CMS 
will account for 50 percent of the associated costs and burdens and the 
Departments of Labor and the Department of the Treasury will each 
account for 25 percent of the associated costs and burdens. The burden 
for CMS will be 28,605,486 hours, with an equivalent associated cost of 
approximately $3,990,969,389 and a cost burden of $19,533. For the 
Departments of Labor and the Treasury, each Department will account for 
a burden of 14,302,743 hours with an equivalent associated cost of 
approximately $1,995,484,695 and a cost burden of $9,766.

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act, (5 U.S.C. 601, et seq.), requires 
agencies to prepare a final regulatory flexibility analysis to describe 
the impact of proposed rules on small entities, unless the head of the 
agency can certify that the rule would not have a significant economic 
impact on a substantial number of small entities. The RFA generally 
defines a ``small entity'' as (1) a proprietary firm meeting the size 
standards of the Small Business Administration (SBA), (2) a not-for-
profit organization that is not dominant in its field, or (3) a small 
government jurisdiction with a population of less than 50,000. States 
and individuals are not included in the definition of ``small entity.''
    HHS uses a change in revenues of more than three to five percent as 
its measure of significant economic impact on a substantial number of 
small entities.
    The final rules require that group health plans and health 
insurance issuers disclose to a participant, beneficiary, or enrollee 
such individual's cost-sharing information for covered items or 
services from a particular provider or providers; to make public in-
network rates, including amounts in underlying fee schedules, 
negotiated rates, and derived amounts for in-network providers; 
historical allowed amounts paid to out-of-network providers and billed 
charges for all covered items and services; and negotiated rates and 
historical net prices for prescription drugs. The Departments are of 
the view issuers generally exceed the size thresholds for ``small 
entities'' established by the SBA, so the Departments are not of the 
view that an initial regulatory flexibility analysis is required for 
such firms. ERISA-covered plans are often small entities, however. 
While the Departments are of the view that these plans would rely on 
the larger issuers or TPAs to comply with the final rules, they would 
still experience increased costs because the costs of complying with 
these requirements will likely be passed on to them. However, as 
discussed in more detail later in this section of this preamble, the 
Departments are not of the view that the additional costs meet the 
significant impact requirement. In addition, while the requirements of 
the final rules do not apply to providers, providers may experience a 
loss in revenue as a result of the demands of price sensitive consumers 
and plans, and because smaller issuers may be unwilling to continue 
paying higher rates than larger issuers for the same items and 
services. The Departments are of the view that issuers would be 
classified under the North American Industry Classification System code 
524114 (Direct Health and Medical Insurance Carriers). According to SBA 
size standards, entities with average annual receipts of $41.5 million 
or less would be considered small entities under North American 
Industry Classification System codes. Issuers could possibly be 
classified under code 621491 (HMO Medical Centers) and, if this is the 
case, the SBA size standard would be $35 million or less.\294\ The 
Departments are of the view that few, if any, insurance companies 
underwriting comprehensive health insurance policies (in contrast, for 
example, to travel insurance policies or dental discount policies) fall 
below these size thresholds. Based on data from MLR annual report 
submissions for the 2017 MLR reporting year, approximately 90 out of 
500 issuers of health insurance coverage nationwide had total premium 
revenue of $41.5 million or less. \295\ This estimate likely overstates 
the actual

[[Page 72292]]

number of small health insurance issuers that may be affected, since 
over 72 percent of these small issuers belong to larger holding groups, 
and most, if not all, of these small issuers are likely to have non-
health lines of business that will result in their revenues exceeding 
$41.5 million. The Departments are of the view that these same 
assumptions also apply to the TPAs that would be affected by the final 
rules. The Departments do not expect any of these 90 potentially small 
entities to experience a change in rebates under the amendments to the 
MLR provisions of the final rules in 45 CFR part 158. The Departments 
acknowledge that it may be likely that a number of small entities might 
enter into contracts with other entities in order to meet the 
requirements in the final rules, perhaps allowing for the development 
of economies of scale. Due to the lack of knowledge regarding what 
small entities may decide to do in order to meet these requirements and 
any costs they might incur related to contracts, the Departments sought 
comment on ways that the final rules will impose additional costs and 
burdens on small entities and how many would be likely to engage in 
contracts to meet the requirements.
---------------------------------------------------------------------------

    \294\ ``Table of Small Business Size Standards Matched to North 
American Industry Classification System Codes.'' United States Small 
Business Administration. Available at: https://www.sba.gov/sites/default/files/2019-08/SBA%20Table%20of%20Size%20Standards_Effective%20Aug%2019%2C%202019_Rev.pdf.
    \295\ ``Medical Loss Ratio Data and System Resources.'' CCIIO. 
Available at https://www.cms.gov/CCIIO/Resources/Data-Resources/mlr.
---------------------------------------------------------------------------

    The Departments received a number of comments related to the 
potential additional costs, burdens, and other effects the final rules 
could have on small entities. These comments have been noted and 
addressed in the RIA and ICR sections titled Regarding Requirements for 
Public Disclosure of In-network Rates, Historical Allowed Amount Data 
for Covered Items and Services from Out-of-Network Providers and 
Prescription Drug Pricing Information; Requirements for Disclosing 
Cost-sharing information to Participant, Beneficiaries, or Enrollees; 
and the Applicability Date section of this preamble.
    For purposes of the RFA, the DOL continues to consider a small 
entity to be an employee benefit plan with fewer than 100 
participants.\296\ Furthermore, while some large employers may have 
small plans, most small plans are maintained by small employers.
---------------------------------------------------------------------------

    \296\ The basis for this definition is found in section 
104(a)(2) of ERISA, which permits the Secretary of Labor to 
prescribe simplified annual reports for pension plans that cover 
fewer than 100 participants.
---------------------------------------------------------------------------

    Thus, the Departments are of the view that assessing the impact of 
the final rules on small plans is an appropriate substitute for 
evaluating the effect on small entities. The definition of small entity 
considered appropriate for this purpose differs, however, from a 
definition of small business that is based on size standards 
promulgated by the SBA (13 CFR 121.201) pursuant to the Small Business 
Act (15 U.S.C. 631, et seq.). Therefore, EBSA requested comments on the 
appropriateness of the size standard used in evaluating the impact of 
the final rules on small entities. Using the DOL definition of small, 
about 2,160,743 of the approximately 2,327,339 plans are small 
entities. Using a threshold approach, if the total costs of the final 
rules are spread evenly across all 1,754 issuers, 205 TPAs, and 
2,327,339 ERISA health plans, without considering size, using the 
three-year average costs, the per-entity costs could be $3,426.77 
($7,981,977,844.10/2,329,298). If those costs are spread evenly across 
the estimated 212.3 million beneficiaries, participants, or enrollees 
\297\ enrolled in plans or issuers required to comply with the 
requirements then the average cost per covered individual would be 
$37.60 ($7,981,977,844.102/212.3 million). Neither the cost per entity 
nor the cost per covered individual is a significant impact. Further, 
the costs estimated in section VI in this preamble may be overstated as 
it is assumed that all of issuers and TPAs will build the internet-
based self-service tool and the machine-readable files, compile the 
appropriate data, and perform the required updates themselves rather 
than using common third parties such as clearinghouses, as discussed in 
section II.C in this preamble. If private health insurance transactions 
are processed through clearinghouses, with at least the fields required 
in the machine-readable files, there could be an unaccounted for source 
of savings, as clearinghouses may already process much of the data that 
issuers and TPAs would be required to collect under the final rules.
---------------------------------------------------------------------------

    \297\ Id. at 272.
---------------------------------------------------------------------------

    In addition, section 1102(b) of the SSA (42 U.S.C. 1302) requires 
the Departments to prepare a regulatory impact analysis if a rule may 
have a significant impact on the operations of a substantial number of 
small rural hospitals. This analysis must conform to the provisions of 
section 604 of the RFA. For purposes of section 1102(b) of the SSA, the 
Departments define a small rural hospital as a hospital that is located 
outside of a metropolitan statistical area and has fewer than 100 beds.
    As noted and addressed in section II.B.2.C in this preamble, 
commenters expressed concerns that exposure of in-network rates could 
have various unintended consequences on the health care industry, group 
health plans and health insurance issuers, and providers. Also as 
discussed in the sections VI.A.2, one commenter stated that the 
proposed rules would create administrative burdens for hospitals as 
hospitals would be required to make massive investments to provide the 
data required under the final rules. The Departments note that the 
final rules do not explicitly apply to hospitals and do not agree that 
hospitals will require massive investments to comply with the final 
rules, as opposed to the potential costs they could incur in order to 
comply with the Hospital Price Transparency final rule. Furthermore, 
the Departments recognize that while the requirements of the final 
rules do not apply to providers, including hospitals, some providers 
may experience a loss in revenue as a result of the demands of price 
sensitive consumers. The Departments also recognize that while the 
requirements in the final rules may result in instances where small 
rural hospitals face additional costs and burdens due to their size and 
the market dynamics in their areas, the generally reduced competition 
amongst rural hospitals, due to the overall lower number of hospitals 
in these areas, will provide them more leverage when negotiating with 
issuers. Nonetheless, some rural hospitals may see their costs increase 
if the lack of competition results in these hospitals being unable to 
negotiate more favorable terms with plans and issuers. This dynamic 
could result in some small rural hospitals seeing their revenue 
decrease as reimbursement rates decline and overall costs increase, 
though rural hospitals could also see reduced costs and burdens if they 
are able to successfully negotiate more favorable network contracts. 
Due to a lack of information and overall knowledge, the Departments are 
not able to confidently estimate the effects the final rules will have 
on small rural hospitals; however, the Departments are of the view that 
the final rules will not have a significant impact on the operations of 
a substantial number of small rural hospitals.
Impact of Regulations on Small Business--Department of the Treasury
    Pursuant to section 7805(f) of the Code, the proposed rules that 
preceded the final rules were submitted to the Chief Counsel for 
Advocacy of the SBA for comment on their impact on small businesses, 
and no comments were received.

C. Unfunded Mandates

    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) 
requires that agencies assess anticipated

[[Page 72293]]

costs and benefits and take certain actions before issuing a final rule 
that includes any Federal mandate that may result in expenditures in 
any one year by a state, local, or tribal governments, in the 
aggregate, or by the private sector, of $100 million in 1995 dollars, 
updated annually for inflation. In 2020, that threshold is 
approximately $156 million.
    State, local, or tribal governments may incur costs to enforce some 
of the requirements of the final rules. The final rules include 
instructions for disclosures that would affect private sector firms 
(for example, issuers offering health insurance coverage in the 
individual and group markets, and TPAs providing administrative 
services to group health plans). The Departments acknowledge that state 
governments could incur costs associated with enforcement of sections 
within the final rules and, although the Departments have not been able 
to quantify all costs, the Departments expect the combined impact on 
state, local, and tribal governments to be below the threshold. The 
costs incurred by the private sector have been previously discussed in 
Collection of Information Requirements sections.
    One commenter contended that due to the requirement to make the 
machine-readable files publicly available, issuers would also be 
required to post files with complete negotiated payment amount 
information, and that these files would be very complex, with thousands 
of procedure codes and many different plans and networks offered by 
issuers. The commenter further contended that due to the complexity and 
size of the files significant state resources would be required to 
review these files in order to ensure their accuracy, completeness, and 
timeliness. They contended that without funding states will be 
challenged in maintaining effective enforcement and urged the 
Departments to consider providing grants to states to cover the cost of 
enforcing any final rules.
    The Departments recognize that due to size and complexity of the 
machine-readable files required some states will incur increased 
burdens and costs to review and ensure compliance with the requirements 
in the final rules. However, at this time, the Departments do not have 
available funding to provide grants to assist states in their efforts. 
The Departments will take it under consideration and evaluate the 
potential necessity to provide grants to assist states in their efforts 
should a significant need arise. The Departments expect that a number 
of states with the requisite authority to enforce the provisions of the 
final rules may defer enforcement to Federal regulators because of lack 
of funds.

D. Federalism

    Executive Order 13132 establishes certain requirements that an 
agency must meet when it issues a final rule that imposes substantial 
direct costs on state and local governments, preempts state law, or 
otherwise has federalism implications. Federal agencies promulgating 
regulations that have federalism implications must consult with state 
and local officials and describe the extent of their consultation and 
the nature of the concerns of state and local officials in this 
preamble to the regulation.
    In the Departments' view, the final rules may have federalism 
implications, because they would have direct effects on the states, the 
relationship between national governments and states, and on the 
distribution of power and responsibilities among various levels of 
government relating to the disclosure of health insurance coverage 
information to the public.
    Under the final rules, all group health plans and health insurance 
issuers, including self-insured, non-Federal governmental group health 
plans as defined in section 2791 of the PHS Act, will be required to 
develop an internet-based self-service tool to disclose to a 
participant, beneficiary, or enrollee, the consumer-specific estimated 
cost-sharing liability for covered items or services from a particular 
provider and also to provide this information by mail upon request. The 
final rules also require plans and issuers to disclose provider in-
network rates, historical data on out-of-network allowed amounts, and 
negotiated rates and historical net prices for prescription drugs 
through digital files in a machine-readable format posted publicly on 
an internet website. Such Federal standards developed under section 
2715A of the PHS Act preempt any related state standards that require 
pricing information to be disclosed to the participant, beneficiary, or 
enrollee, or otherwise publicly disclosed, to the extent the state 
disclosure requirements would provide less information to the consumer 
or the public than what is required under the final rules.
    The Departments are of the view that the final rules may have 
federalism implications based on the required disclosure of pricing 
information, as the Departments are aware of at least 28 states that 
have passed some form of price-transparency legislation, such as all-
payer claims databases, consumer-facing price comparison tools, and the 
right to shop programs.\298\ Under these state provisions, state 
requirements vary broadly in terms of the level of disclosure 
required.\299\ Some states list the price for each individual service, 
whereas some states list the aggregate costs across providers and over 
time to measure the price associated with an episode of illness. States 
also differ in terms of the dissemination of the information. For 
example, California mandates that uninsured patients receive estimated 
prices upon request. In contrast, other states use websites or software 
applications that allow consumers to compare prices across providers. 
Only seven states have published the pricing information of issuers on 
consumer-facing public websites.\300\ Therefore, the final rules may 
require a higher level of disclosure by plans and issuers than some 
state laws.
---------------------------------------------------------------------------

    \298\ ``Transparency of Health Costs; State Actions.'' National 
Conference of State Legislatures. March 2017. Available at: https://www.ncsl.org/research/health/transparency-and-disclosure-health-costs.aspx.
    \299\ Mehrotra, A., Chernew, M., and Sinaiko, A. ``Promise and 
Reality of Price Transparency.'' 14 N. Engl. J. Med. 378. April 5, 
2018. Available at: https://www.nejm.org/doi/full/10.1056/NEJMhpr1715229.
    \300\ Evans, M. ``One State's Effort to Publicize Hospital 
Prices Brings Mixed Results.'' Wall Street Journal. June 26, 2019. 
Available at: https://www.wsj.com/articles/one-states-effort-to-publicize-hospital-prices-brings-mixed-results-11561555562.
---------------------------------------------------------------------------

    One commenter asked that the Departments clarify their intentions 
regarding Federal preemption with respect to state laws that conflict 
with the final rules. Congress passed PPACA to improve the health 
insurance markets on a nationwide basis. King. v. Burwell, 135 S. Ct. 
2480, 2496 (2015). Under section 1321(d) of PPACA and section 2724(a) 
of the PHS Act, nothing in these regulations would preempt state law 
unless such state law prevents the application of the applicable 
Federal requirement. Based on this legal context, the Departments 
intend the implementation of the rules to preempt state law to the 
extent enforcement of state law would prevent the application of 
PPACA.\301\ To the extent the final rules preempt state law, they do so 
under well-settled law.
---------------------------------------------------------------------------

    \301\ See section 1321(d) of PPACA (``Nothing in this title 
shall be construed to preempt any State law that does not prevent 
the application of the provisions of this title.)
---------------------------------------------------------------------------

    In general, through section 514, ERISA supersedes state laws to the 
extent that they relate to any covered employee benefit plan, and 
preserves state laws that regulate insurance, banking, or securities. 
Furthermore, the preemption provisions of section 731 of ERISA and 
section 2724 of the PHS Act

[[Page 72294]]

(implemented in 29 CFR 2590.731(a) and 45 CFR 146.143(a)) apply so that 
the HIPAA requirements (including those of PPACA) are not to be 
``construed to supersede any provision of state law which establishes, 
implements, or continues in effect any standard or requirement solely 
relating to issuers in connection with group health insurance coverage 
except to the extent that such standard or requirement prevents the 
application of a `requirement' of a federal standard.'' The conference 
report accompanying HIPAA indicates that this preemption is intended to 
be the ``narrowest'' preemption of states laws (See House Conf. Rep. 
No. 104-736, at 205, reprinted in 1996 U.S. Code Cong. & Admin. News 
2018). States may therefore continue to apply state law requirements to 
issuers except to the extent that such requirements prevent the 
application of PPACA requirements that are the subject of this 
rulemaking. Accordingly, states have significant latitude to impose 
requirements on issuers that are more restrictive than the Federal law.
    In compliance with the requirement of Executive Order 13132 that 
agencies examine closely any policies that may have federalism 
implications or limit the policy making discretion of the states, the 
Departments have engaged in efforts to consult with and work 
cooperatively with affected states, including participating in 
conference calls with and attending conferences of NAIC, and consulting 
with state insurance officials on an individual basis. The Departments 
intend to act in a similar fashion in enforcing PPACA, including the 
provisions of section 2715A of the PHS Act. While developing the final 
rules, the Departments attempted to balance the states' interests in 
regulating issuers with Congress' intent to provide an improved level 
of price transparency to the public in every state. By doing so, it is 
the Departments' view that they have complied with the requirements of 
Executive Order 13132.
    Pursuant to the requirements set forth in section 8(a) of Executive 
Order 13132, and by the signatures affixed to the final rules, the 
Departments certify that the Department of the Treasury, Employee 
Benefits Security Administration, and the CMS have complied with the 
requirements of Executive Order 13132 for the final rules in a 
meaningful and timely manner.

E. Congressional Review Act

    The final rules are subject to the Congressional Review Act 
provisions of the Small Business Regulatory Enforcement Fairness Act of 
1996 (5 U.S.C. 801, et seq.), which specifies that before a rule can 
take effect, the Federal agency promulgating the rule shall submit to 
each House of the Congress and to the Comptroller General a report 
containing a copy of the rule along with other specified information. 
Therefore, the final rules have been transmitted to the Congress and 
the Comptroller General. Pursuant to the Congressional Review Act, the 
Office of Information and Regulatory Affairs designated the final rules 
as ``major rules'' as that term is defined in 5 U.S.C. 804(2), because 
it is likely to result in an annual effect on the economy of $100 
million or more. In accordance with the provisions of Executive Order 
12866, this regulation was reviewed by the Office of Management and 
Budget.

F. Reducing Regulation and Controlling Regulatory Costs

    Executive Order 13771, titled Reducing Regulation and Controlling 
Regulatory Costs, was issued on January 30, 2017. Section 2(a) of 
Executive Order 13771 requires an agency, unless prohibited by law, to 
identify at least two existing regulations to be repealed when the 
agency publicly proposes for notice and comment, or otherwise issues, a 
new regulation. In furtherance of this requirement, section 2(c) of 
Executive Order 13771 requires that the new incremental costs 
associated with new regulations shall, to the extent permitted by law, 
be offset by the elimination of existing costs associated with at least 
two prior regulations.
    The final rules are considered an Executive Order 13771 regulatory 
action. The Departments estimate that these rules will generate 
$3,489.71 million in costs in 2021, $10,761.15 million in 2022, $6,569 
million in 2023, and annual costs of approximately $2,330 million 
thereafter. Discounted at 7 percent relative to year 2016, over a 
perpetual time horizon the annualized value of these costs is $2,413.54 
million. Details on the estimated costs of the final rules can be found 
in the preceding analyses.

VII. Statutory Authority

    The Department of the Treasury regulations are adopted pursuant to 
the authority contained in sections 7805 and 9833 of the Code.
    The Department of Labor regulations are adopted pursuant to the 
authority contained in 29 U.S.C. 1135, 1185d, and 1191c; and Secretary 
of Labor's Order 1-2011, 77 FR 1088 (Jan. 9, 2012).
    The Department of Health and Human Services regulations are adopted 
pursuant to the authority contained in sections 1311 of PPACA, 2701 
through 2763, 2791, 2792, and 2794 of the PHS Act (42 U.S.C. 300gg 
through 300gg-63, 300gg-91, 300gg-92, and 300gg-94), as amended.

List of Subjects

26 CFR Part 54

    Excise taxes, Health care, Health insurance, Pensions, Reporting 
and recordkeeping requirements.

29 CFR Part 2590

    Continuation coverage, Disclosure, Employee benefit plans, Group 
health plans, Health care, Health insurance, Medical child support, 
Reporting and recordkeeping requirements.

45 CFR Part 147

    Health care, Health insurance, Reporting and recordkeeping 
requirements, State regulation of health insurance.

45 CFR Part 158

    Administrative practice and procedure, Claims, Health care, Health 
insurance, Penalties, Reporting and recordkeeping requirements.

Sunita Lough,
Deputy Commissioner for Services and Enforcement, Internal Revenue 
Service.
    Approved: October 28, 2020.

David J. Kautter,
 Assistant Secretary of the Treasury (Tax Policy).
    Signed at Washington DC, this 30th day of October, 2020.

Jeanne Klinefelter Wilson,
Acting Assistant Secretary, Employee Benefits Security Administration, 
Department of Labor.
    Dated: October 8, 2020.

Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.
    Dated: October 20, 2020.

Alex M. Azar II,
Secretary, Department of Health and Human Services.

DEPARTMENT OF THE TREASURY

Internal Revenue Service

Amendments to the Regulations

    For the reasons set forth in this preamble, the Department of the 
Treasury amends 26 CFR part 54 as set forth below:

PART 54--PENSION EXCISE TAXES

0
Par. 1. The authority citation for part 54 is amended by adding an 
entry for Sec. Sec.  54.9815-2715A1, 54.9815-2715A2, and 54.9815-2715A3 
in numerical order to read in part as follows:


[[Page 72295]]


    Authority: 26 U.S.C. 7805, unless otherwise noted.
* * * * *
    Sections 54.9815-2715A1, 54.9815-2715A2, and 54.9815-2715A3 are 
also issued under 26 U.S.C. 9833;
* * * * *

0
Par. 2. Sections 54.9815-2715A1, 54.9815-2715A2, and 54.9815-2715A3 are 
added to read as follows:


Sec.  54.9815-2715A1   Transparency in coverage--definitions.

    (a) Scope and definitions--(1) Scope. This section sets forth 
definitions for the price transparency requirements for group health 
plans and health insurance issuers offering group health insurance 
coverage established in this section and Sec. Sec.  54.9815-2715A2 and 
54.9815-2715A3.
    (2) Definitions. For purposes of this section and Sec. Sec.  
54.9815-2715A2 and 54.9815-2715A3, the following definitions apply:
    (i) Accumulated amounts means:
    (A) The amount of financial responsibility a participant or 
beneficiary has incurred at the time a request for cost-sharing 
information is made, with respect to a deductible or out-of-pocket 
limit. If an individual is enrolled in other than self-only coverage, 
these accumulated amounts shall include the financial responsibility a 
participant or beneficiary has incurred toward meeting his or her 
individual deductible or out-of-pocket limit, as well as the amount of 
financial responsibility that all the individuals enrolled under the 
plan or coverage have incurred, in aggregate, toward meeting the other 
than self-only deductible or out-of-pocket limit, as applicable. 
Accumulated amounts include any expense that counts toward a deductible 
or out-of-pocket limit (such as a copayment or coinsurance), but 
exclude any expense that does not count toward a deductible or out-of-
pocket limit (such as any premium payment, out-of-pocket expense for 
out-of-network services, or amount for items or services not covered 
under the group health plan or health insurance coverage); and
    (B) To the extent a group health plan or health insurance issuer 
imposes a cumulative treatment limitation on a particular covered item 
or service (such as a limit on the number of items, days, units, 
visits, or hours covered in a defined time period) independent of 
individual medical necessity determinations, the amount that has 
accrued toward the limit on the item or service (such as the number of 
items, days, units, visits, or hours the participant or beneficiary, 
has used within that time period).
    (ii) Beneficiary has the meaning given the term under section 3(8) 
of the Employee Retirement Income Security Act of 1974 (ERISA).
    (iii) Billed charge means the total charges for an item or service 
billed to a group health plan or health insurance issuer by a provider.
    (iv) Billing code means the code used by a group health plan or 
health insurance issuer or provider to identify health care items or 
services for purposes of billing, adjudicating, and paying claims for a 
covered item or service, including the Current Procedural Terminology 
(CPT) code, Healthcare Common Procedure Coding System (HCPCS) code, 
Diagnosis-Related Group (DRG) code, National Drug Code (NDC), or other 
common payer identifier.
    (v) Bundled payment arrangement means a payment model under which a 
provider is paid a single payment for all covered items and services 
provided to a participant or beneficiary for a specific treatment or 
procedure.
    (vi) Copayment assistance means the financial assistance a 
participant or beneficiary receives from a prescription drug or medical 
supply manufacturer towards the purchase of a covered item or service.
    (vii) Cost-sharing liability means the amount a participant or 
beneficiary is responsible for paying for a covered item or service 
under the terms of the group health plan or health insurance coverage. 
Cost-sharing liability generally includes deductibles, coinsurance, and 
copayments, but does not include premiums, balance billing amounts by 
out-of-network providers, or the cost of items or services that are not 
covered under a group health plan or health insurance coverage.
    (viii) Cost-sharing information means information related to any 
expenditure required by or on behalf of a participant or beneficiary 
with respect to health care benefits that are relevant to a 
determination of the participant's or beneficiary's cost-sharing 
liability for a particular covered item or service.
    (ix) Covered items or services means those items or services, 
including prescription drugs, the costs for which are payable, in whole 
or in part, under the terms of a group health plan or health insurance 
coverage.
    (x) Derived amount means the price that a group health plan or 
health insurance issuer assigns to an item or service for the purpose 
of internal accounting, reconciliation with providers, or submitting 
data in accordance with the requirements of 45 CFR 153.710(c).
    (xi) Historical net price means the retrospective average amount a 
group health plan or health insurance issuer paid for a prescription 
drug, inclusive of any reasonably allocated rebates, discounts, 
chargebacks, fees, and any additional price concessions received by the 
plan or issuer with respect to the prescription drug. The allocation 
shall be determined by dollar value for non-product specific and 
product-specific rebates, discounts, chargebacks, fees, and other price 
concessions to the extent that the total amount of any such price 
concession is known to the group health plan or health insurance issuer 
at the time of publication of the historical net price in a machine-
readable file in accordance with Sec.  54.9815-2715A3. However, to the 
extent that the total amount of any non-product specific and product-
specific rebates, discounts, chargebacks, fees, or other price 
concessions is not known to the group health plan or health insurance 
issuer at the time of file publication, then the plan or issuer shall 
allocate such rebates, discounts, chargebacks, fees, and other price 
concessions by using a good faith, reasonable estimate of the average 
price concessions based on the rebates, discounts, chargebacks, fees, 
and other price concessions received over a time period prior to the 
current reporting period and of equal duration to the current reporting 
period, as determined under Sec.  54.9815-2715A3(b)(1)(iii)(D)(3).
    (xii) In-network provider means any provider of any item or service 
with which a group health plan or health insurance issuer, or a third 
party for the plan or issuer, has a contract setting forth the terms 
and conditions on which a relevant item or service is provided to a 
participant or beneficiary.
    (xiii) Items or services means all encounters, procedures, medical 
tests, supplies, prescription drugs, durable medical equipment, and 
fees (including facility fees), provided or assessed in connection with 
the provision of health care.
    (xiv) Machine-readable file means a digital representation of data 
or information in a file that can be imported or read by a computer 
system for further processing without human intervention, while 
ensuring no semantic meaning is lost.
    (xv) National Drug Code means the unique 10- or 11-digit 3-segment 
number assigned by the Food and Drug Administration, which provides a 
universal product identifier for drugs in the United States.

[[Page 72296]]

    (xvi) Negotiated rate means the amount a group health plan or 
health insurance issuer has contractually agreed to pay an in-network 
provider, including an in-network pharmacy or other prescription drug 
dispenser, for covered items and services, whether directly or 
indirectly, including through a third-party administrator or pharmacy 
benefit manager.
    (xvii) Out-of-network allowed amount means the maximum amount a 
group health plan or health insurance issuer will pay for a covered 
item or service furnished by an out-of-network provider.
    (xviii) Out-of-network provider means a provider of any item or 
service that does not have a contract under a participant's or 
beneficiary's group health plan or health insurance coverage to provide 
items or services.
    (xix) Out-of-pocket limit means the maximum amount that a 
participant or beneficiary is required to pay during a coverage period 
for his or her share of the costs of covered items and services under 
his or her group health plan or health insurance coverage, including 
for self-only and other than self-only coverage, as applicable.
    (xx) Plain language means written and presented in a manner 
calculated to be understood by the average participant or beneficiary.
    (xxi) Prerequisite means concurrent review, prior authorization, 
and step-therapy or fail-first protocols related to covered items and 
services that must be satisfied before a group health plan or health 
insurance issuer will cover the item or service. The term prerequisite 
does not include medical necessity determinations generally or other 
forms of medical management techniques.
    (xxii) Underlying fee schedule rate means the rate for a covered 
item or service from a particular in-network provider, or providers 
that a group health plan or health insurance issuer uses to determine a 
participant's or beneficiary's cost-sharing liability for the item or 
service, when that rate is different from the negotiated rate or 
derived amount.
    (b) [Reserved]


Sec.  54.9815-2715A2  Transparency in coverage--required disclosures to 
participants and beneficiaries.

    (a) Scope and definitions--(1) Scope. This section establishes 
price transparency requirements for group health plans and health 
insurance issuers offering group health insurance coverage for the 
timely disclosure of information about costs related to covered items 
and services under a group plan or health insurance coverage.
    (2) Definitions. For purposes of this section, the definitions in 
Sec.  54.9815-2715A1 apply.
    (b) Required disclosures to participants and beneficiaries. At the 
request of a participant or beneficiary who is enrolled in a group 
health plan, the plan must provide to the participant or beneficiary 
the information required under paragraph (b)(1) of this section, in 
accordance with the method and format requirements set forth in 
paragraph (b)(2) of this section.
    (1) Required cost-sharing information. The information required 
under this paragraph (b)(1) is the following cost-sharing information, 
which is accurate at the time the request is made, with respect to a 
participant's or beneficiary's cost-sharing liability for covered items 
and services:
    (i) An estimate of the participant's or beneficiary's cost-sharing 
liability for a requested covered item or service furnished by a 
provider or providers that is calculated based on the information 
described in paragraphs (b)(1)(ii) through (iv) of this section.
    (A) If the request for cost-sharing information relates to items 
and services that are provided within a bundled payment arrangement, 
and the bundled payment arrangement includes items or services that 
have a separate cost-sharing liability, the group health plan or health 
insurance issuer must provide estimates of the cost-sharing liability 
for the requested covered item or service, as well as an estimate of 
the cost-sharing liability for each of the items and services in the 
bundled payment arrangement that have separate cost-sharing 
liabilities. While group health plans and health insurance issuers are 
not required to provide estimates of cost-sharing liability for a 
bundled payment arrangement where the cost-sharing is imposed 
separately for each item and service included in the bundled payment 
arrangement, nothing prohibits plans or issuers from providing 
estimates for multiple items and services in situations where such 
estimates could be relevant to participants or beneficiaries, as long 
as the plan or issuer also discloses information about the relevant 
items or services individually, as required in paragraph (b)(1)(v) of 
this section.
    (B) For requested items and services that are recommended 
preventive services under section 2713 of the Public Health Service Act 
(PHS Act), if the group health plan or health insurance issuer cannot 
determine whether the request is for preventive or non-preventive 
purposes, the plan or issuer must display the cost-sharing liability 
that applies for non-preventive purposes. As an alternative, a group 
health plan or health insurance issuer may allow a participant or 
beneficiary to request cost-sharing information for the specific 
preventive or non-preventive item or service by including terms such as 
``preventive'', ``non-preventive'' or ``diagnostic'' as a means to 
request the most accurate cost-sharing information.
    (ii) Accumulated amounts.
    (iii) In-network rate, comprised of the following elements, as 
applicable to the group health plan's or health insurance issuer's 
payment model:
    (A) Negotiated rate, reflected as a dollar amount, for an in-
network provider or providers for the requested covered item or 
service; this rate must be disclosed even if it is not the rate the 
plan or issuer uses to calculate cost-sharing liability; and
    (B) Underlying fee schedule rate, reflected as a dollar amount, for 
the requested covered item or service, to the extent that it is 
different from the negotiated rate.
    (iv) Out-of-network allowed amount or any other rate that provides 
a more accurate estimate of an amount a group health plan or health 
insurance issuer will pay for the requested covered item or service, 
reflected as a dollar amount, if the request for cost-sharing 
information is for a covered item or service furnished by an out-of-
network provider; provided, however, that in circumstances in which a 
plan or issuer reimburses an out-of-network provider a percentage of 
the billed charge for a covered item or service, the out-of-network 
allowed amount will be that percentage.
    (v) If a participant or beneficiary requests information for an 
item or service subject to a bundled payment arrangement, a list of the 
items and services included in the bundled payment arrangement for 
which cost-sharing information is being disclosed.
    (vi) If applicable, notification that coverage of a specific item 
or service is subject to a prerequisite.
    (vii) A notice that includes the following information in plain 
language:
    (A) A statement that out-of-network providers may bill participants 
or beneficiaries for the difference between a provider's billed charges 
and the sum of the amount collected from the group health plan or 
health insurance issuer and from the participant or beneficiary in the 
form of a copayment or coinsurance amount (the difference referred to 
as balance billing), and that the cost-sharing information provided 
pursuant to this paragraph (b)(1) does not account for these potential

[[Page 72297]]

additional amounts. This statement is only required if balance billing 
is permitted under state law;
    (B) A statement that the actual charges for a participant's or 
beneficiary's covered item or service may be different from an estimate 
of cost-sharing liability provided pursuant to paragraph (b)(1)(i) of 
this section, depending on the actual items or services the participant 
or beneficiary receives at the point of care;
    (C) A statement that the estimate of cost-sharing liability for a 
covered item or service is not a guarantee that benefits will be 
provided for that item or service;
    (D) A statement disclosing whether the plan counts copayment 
assistance and other third-party payments in the calculation of the 
participant's or beneficiary's deductible and out-of-pocket maximum;
    (E) For items and services that are recommended preventive services 
under section 2713 of the PHS Act, a statement that an in-network item 
or service may not be subject to cost-sharing if it is billed as a 
preventive service if the group health plan or health insurance issuer 
cannot determine whether the request is for a preventive or non-
preventive item or service; and
    (F) Any additional information, including other disclaimers, that 
the group health plan or health insurance issuer determines is 
appropriate, provided the additional information does not conflict with 
the information required to be provided by this paragraph (b)(1).
    (2) Required methods and formats for disclosing information to 
participants and beneficiaries. The methods and formats for the 
disclosure required under this paragraph (b) are as follows:
    (i) Internet-based self-service tool. Information provided under 
this paragraph (b) must be made available in plain language, without 
subscription or other fee, through a self-service tool on an internet 
website that provides real-time responses based on cost-sharing 
information that is accurate at the time of the request. Group health 
plans and health insurance issuers must ensure that the self-service 
tool allows users to:
    (A) Search for cost-sharing information for a covered item or 
service provided by a specific in-network provider or by all in-network 
providers by inputting:
    (1) A billing code (such as CPT code 87804) or a descriptive term 
(such as ``rapid flu test''), at the option of the user;
    (2) The name of the in-network provider, if the user seeks cost-
sharing information with respect to a specific in-network provider; and
    (3) Other factors utilized by the plan or issuer that are relevant 
for determining the applicable cost-sharing information (such as 
location of service, facility name, or dosage).
    (B) Search for an out-of-network allowed amount, percentage of 
billed charges, or other rate that provides a reasonably accurate 
estimate of the amount a group health plan or health insurance issuer 
will pay for a covered item or service provided by out-of-network 
providers by inputting:
    (1) A billing code or descriptive term, at the option of the user; 
and
    (2) Other factors utilized by the plan or issuer that are relevant 
for determining the applicable out-of-network allowed amount or other 
rate (such as the location in which the covered item or service will be 
sought or provided).
    (C) Refine and reorder search results based on geographic proximity 
of in-network providers, and the amount of the participant's or 
beneficiary's estimated cost-sharing liability for the covered item or 
service, to the extent the search for cost-sharing information for 
covered items or services returns multiple results.
    (ii) Paper method. Information provided under this paragraph (b) 
must be made available in plain language, without a fee, in paper form 
at the request of the participant or beneficiary. In responding to such 
a request, the group health plan or health insurance issuer may limit 
the number of providers with respect to which cost-sharing information 
for covered items and services is provided to no fewer than 20 
providers per request. The group health plan or health insurance issuer 
is required to:
    (A) Disclose the applicable provider-per-request limit to the 
participant or beneficiary;
    (B) Provide the cost-sharing information in paper form pursuant to 
the individual's request, in accordance with the requirements in 
paragraphs (b)(2)(i)(A) through (C) of this section; and
    (C) Mail the cost-sharing information in paper form no later than 2 
business days after an individual's request is received.
    (D) To the extent participants or beneficiaries request disclosure 
other than by paper (for example, by phone or email), plans and issuers 
may provide the disclosure through another means, provided the 
participant or beneficiary agrees that disclosure through such means is 
sufficient to satisfy the request and the request is fulfilled at least 
as rapidly as required for the paper method.
    (3) Special rule to prevent unnecessary duplication--(i) Special 
rule for insured group health plans. To the extent coverage under a 
group health plan consists of group health insurance coverage, the plan 
satisfies the requirements of this paragraph (b) if the plan requires 
the health insurance issuer offering the coverage to provide the 
information required by this paragraph (b) in compliance with this 
section pursuant to a written agreement. Accordingly, if a health 
insurance issuer and a plan sponsor enter into a written agreement 
under which the issuer agrees to provide the information required under 
this paragraph (b) in compliance with this section, and the issuer 
fails to do so, then the issuer, but not the plan, violates the 
transparency disclosure requirements of this paragraph (b).
    (ii) Other contractual arrangements. A group health plan or health 
insurance issuer may satisfy the requirements under this paragraph (b) 
by entering into a written agreement under which another party (such as 
a pharmacy benefit manager or other third-party) provides the 
information required by this paragraph (b) in compliance with this 
section. Notwithstanding the preceding sentence, if a group health plan 
or health insurance issuer chooses to enter into such an agreement and 
the party with which it contracts fails to provide the information in 
compliance with this paragraph (b), the plan or issuer violates the 
transparency disclosure requirements of this paragraph (b).
    (c) Applicability. (1) The provisions of this section apply for 
plan years beginning on or after January 1, 2023 with respect to the 
500 items and services to be posted on a publicly available website, 
and with respect to all covered items and services, for plan years 
beginning on or after January 1, 2024.
    (2) As provided under Sec.  54.9815-1251, this section does not 
apply to grandfathered health plans. This section also does not apply 
to health reimbursement arrangements or other account-based group 
health plans as defined in Sec.  [thinsp]54.9815-2711(d)(6) or short-
term, limited-duration insurance as defined in Sec.  54.9801-2.
    (3) Nothing in this section alters or otherwise affects a group 
health plan's or health insurance issuer's duty to comply with 
requirements under other applicable state or Federal laws, including 
those governing the accessibility, privacy, or security of information 
required to be disclosed under this section, or those governing the 
ability of properly authorized

[[Page 72298]]

representatives to access participant or beneficiary information held 
by plans and issuers.
    (4) A group health plan or health insurance issuer will not fail to 
comply with this section solely because it, acting in good faith and 
with reasonable diligence, makes an error or omission in a disclosure 
required under paragraph (b) of this section, provided that the plan or 
issuer corrects the information as soon as practicable.
    (5) A group health plan or health insurance issuer will not fail to 
comply with this section solely because, despite acting in good faith 
and with reasonable diligence, its internet website is temporarily 
inaccessible, provided that the plan or issuer makes the information 
available as soon as practicable.
    (6) To the extent compliance with this section requires a group 
health plan or health insurance issuer to obtain information from any 
other entity, the plan or issuer will not fail to comply with this 
section because it relied in good faith on information from the other 
entity, unless the plan or issuer knows, or reasonably should have 
known, that the information is incomplete or inaccurate.
    (d) Severability. Any provision of this section held to be invalid 
or unenforceable by its terms, or as applied to any person or 
circumstance, or stayed pending further agency action, shall be 
severable from this section and shall not affect the remainder thereof 
or the application of the provision to persons not similarly situated 
or to dissimilar circumstances.


Sec.  54.9815-2715A3  Transparency in coverage--requirements for public 
disclosure.

    (a) Scope and definitions--(1) Scope. This section establishes 
price transparency requirements for group health plans and health 
insurance issuers offering group health insurance coverage for the 
timely disclosure of information about costs related to covered items 
and services under a group plan or health insurance coverage.
    (2) Definitions. For purposes of this section, the definitions in 
Sec.  54.9815-2715A1 apply.
    (b) Requirements for public disclosure of in-network provider rates 
for covered items and services, out-of-network allowed amounts and 
billed charges for covered items and services, and negotiated rates and 
historical net prices for covered prescription drugs. A group health 
plan or health insurance issuer must make available on an internet 
website the information required under paragraph (b)(1) of this section 
in three machine-readable files, in accordance with the method and 
format requirements described in paragraph (b)(2) of this section, and 
that are updated as required under paragraph (b)(3) of this section.
    (1) Required information. Machine-readable files required under 
this paragraph (b) that are made available to the public by a group 
health plan or health insurance issuer must include:
    (i) An in-network rate machine-readable file that includes the 
required information under this paragraph (b)(1)(i) for all covered 
items and services, except for prescription drugs that are subject to a 
fee-for-service reimbursement arrangement, which must be reported in 
the prescription drug machine-readable file pursuant to paragraph 
(b)(1)(iii) of this section. The in-network rate machine-readable file 
must include:
    (A) For each coverage option offered by a group health plan or 
health insurance issuer, the name and the 14-digit Health Insurance 
Oversight System (HIOS) identifier, or, if the 14-digit HIOS identifier 
is not available, the 5-digit HIOS identifier, or if no HIOS identifier 
is available, the Employer Identification Number (EIN);
    (B) A billing code, which in the case of prescription drugs must be 
an NDC, and a plain language description for each billing code for each 
covered item or service under each coverage option offered by a plan or 
issuer; and
    (C) All applicable rates, which may include one or more of the 
following: negotiated rates, underlying fee schedule rates, or derived 
amounts. If a group health plan or health insurance issuer does not use 
negotiated rates for provider reimbursement, then the plan or issuer 
should disclose derived amounts to the extent these amounts are already 
calculated in the normal course of business. If the group health plan 
or health insurance issuer uses underlying fee schedule rates for 
calculating cost sharing, then the plan or issuer should include the 
underlying fee schedule rates in addition to the negotiated rate or 
derived amount. Applicable rates, including for both individual items 
and services and items and services in a bundled payment arrangement, 
must be:
    (1) Reflected as dollar amounts, with respect to each covered item 
or service that is furnished by an in-network provider. If the 
negotiated rate is subject to change based upon participant or 
beneficiary-specific characteristics, these dollar amounts should be 
reflected as the base negotiated rate applicable to the item or service 
prior to adjustments for participant or beneficiary-specific 
characteristics;
    (2) Associated with the National Provider Identifier (NPI), Tax 
Identification Number (TIN), and Place of Service Code for each in-
network provider;
    (3) Associated with the last date of the contract term or 
expiration date for each provider-specific applicable rate that applies 
to each covered item or service; and
    (4) Indicated with a notation where a reimbursement arrangement 
other than a standard fee-for-service model (such as capitation or a 
bundled payment arrangement) applies.
    (ii) An out-of-network allowed amount machine-readable file, 
including:
    (A) For each coverage option offered by a group health plan or 
health insurance issuer, the name and the 14-digit HIOS identifier, or, 
if the 14-digit HIOS identifier is not available, the 5-digit HIOS 
identifier, or, if no HIOS identifier is available, the EIN;
    (B) A billing code, which in the case of prescription drugs must be 
an NDC, and a plain language description for each billing code for each 
covered item or service under each coverage option offered by a plan or 
issuer; and
    (C) Unique out-of-network allowed amounts and billed charges with 
respect to covered items or services, furnished by out-of-network 
providers during the 90-day time period that begins 180 days prior to 
the publication date of the machine-readable file (except that a group 
health plan or health insurance issuer must omit such data in relation 
to a particular item or service and provider when compliance with this 
paragraph (b)(1)(ii)(C) would require the plan or issuer to report 
payment of out-of-network allowed amounts in connection with fewer than 
20 different claims for payments under a single plan or coverage). 
Consistent with paragraph (c)(3) of this section, nothing in this 
paragraph (b)(1)(ii)(C) requires the disclosure of information that 
would violate any applicable health information privacy law. Each 
unique out-of-network allowed amount must be:
    (1) Reflected as a dollar amount, with respect to each covered item 
or service that is furnished by an out-of-network provider; and
    (2) Associated with the NPI, TIN, and Place of Service Code for 
each out-of-network provider.
    (iii) A prescription drug machine-readable file, including:
    (A) For each coverage option offered by a group health plan or 
health insurance issuer, the name and the 14-digit HIOS identifier, or, 
if the 14-digit HIOS identifier is not available, the 5-

[[Page 72299]]

digit HIOS identifier, or, if no HIOS identifier is available, the EIN;
    (B) The NDC and the proprietary and nonproprietary name assigned to 
the NDC by the Food and Drug Administration (FDA) for each covered item 
or service that is a prescription drug under each coverage option 
offered by a plan or issuer;
    (C) The negotiated rates which must be:
    (1) Reflected as a dollar amount, with respect to each NDC that is 
furnished by an in-network provider, including an in-network pharmacy 
or other prescription drug dispenser;
    (2) Associated with the NPI, TIN, and Place of Service Code for 
each in-network provider, including each in-network pharmacy or other 
prescription drug dispenser; and
    (3) Associated with the last date of the contract term for each 
provider-specific negotiated rate that applies to each NDC; and
    (D) Historical net prices that are:
    (1) Reflected as a dollar amount, with respect to each NDC that is 
furnished by an in-network provider, including an in-network pharmacy 
or other prescription drug dispenser;
    (2) Associated with the NPI, TIN, and Place of Service Code for 
each in-network provider, including each in-network pharmacy or other 
prescription drug dispenser; and
    (3) Associated with the 90-day time period that begins 180 days 
prior to the publication date of the machine-readable file for each 
provider-specific historical net price that applies to each NDC (except 
that a group health plan or health insurance issuer must omit such data 
in relation to a particular NDC and provider when compliance with this 
paragraph (b)(1)(iii)(D) would require the plan or issuer to report 
payment of historical net prices calculated using fewer than 20 
different claims for payment). Consistent with paragraph (c)(3) of this 
section, nothing in this paragraph (b)(1)(iii)(D) requires the 
disclosure of information that would violate any applicable health 
information privacy law.
    (2) Required method and format for disclosing information to the 
public. The machine-readable files described in this paragraph (b) must 
be available in a form and manner as specified in guidance issued by 
the Department of the Treasury, the Department of Labor, and the 
Department of Health and Human Services. The machine-readable files 
must be publicly available and accessible to any person free of charge 
and without conditions, such as establishment of a user account, 
password, or other credentials, or submission of personally 
identifiable information to access the file.
    (3) Timing. A group health plan or health insurance issuer must 
update the machine-readable files and information required by this 
paragraph (b) monthly. The group health plan or health insurance issuer 
must clearly indicate the date that the files were most recently 
updated.
    (4) Special rules to prevent unnecessary duplication--(i) Special 
rule for insured group health plans. To the extent coverage under a 
group health plan consists of group health insurance coverage, the plan 
satisfies the requirements of this paragraph (b) if the plan requires 
the health insurance issuer offering the coverage to provide the 
information pursuant to a written agreement. Accordingly, if a health 
insurance issuer and a group health plan sponsor enter into a written 
agreement under which the issuer agrees to provide the information 
required under this paragraph (b) in compliance with this section, and 
the issuer fails to do so, then the issuer, but not the plan, violates 
the transparency disclosure requirements of this paragraph (b).
    (ii) Other contractual arrangements. A group health plan or health 
insurance issuer may satisfy the requirements under this paragraph (b) 
by entering into a written agreement under which another party (such as 
a third-party administrator or health care claims clearinghouse) will 
provide the information required by this paragraph (b) in compliance 
with this section. Notwithstanding the preceding sentence, if a group 
health plan or health insurance issuer chooses to enter into such an 
agreement and the party with which it contracts fails to provide the 
information in compliance with this paragraph (b), the plan or issuer 
violates the transparency disclosure requirements of this paragraph 
(b).
    (iii) Aggregation permitted for out-of-network allowed amounts. 
Nothing in this section prohibits a group health plan or health 
insurance issuer from satisfying the disclosure requirement described 
in paragraph (b)(1)(ii) of this section by disclosing out-of-network 
allowed amounts made available by, or otherwise obtained from, an 
issuer, a service provider, or other party with which the plan or 
issuer has entered into a written agreement to provide the information, 
provided the minimum claim threshold described in paragraph 
(b)(1)(ii)(C) of this section is independently met for each item or 
service and for each plan or coverage included in an aggregated Allowed 
Amount File. Under such circumstances, health insurance issuers, 
service providers, or other parties with which the group health plan or 
issuer has contracted may aggregate out-of-network allowed amounts for 
more than one plan or insurance policy or contract. Additionally, 
nothing in this section prevents the Allowed Amount File from being 
hosted on a third-party website or prevents a plan administrator or 
issuer from contracting with a third party to post the file. However, 
if a plan or issuer chooses not to also host the file separately on its 
own website, it must provide a link on its own public website to the 
location where the file is made publicly available.
    (c) Applicability. (1) The provisions of this section apply for 
plan years beginning on or after January 1, 2022.
    (2) As provided under Sec.  54.9815-1251, this section does not 
apply to grandfathered health plans. This section also does not apply 
to health reimbursement arrangements or other account-based group 
health plans as defined in Sec.  [thinsp]54.9815-2711(d)(6) or short 
term limited duration insurance as defined in Sec.  54.9801-2.
    (3) Nothing in this section alters or otherwise affects a group 
health plan's or health insurance issuer's duty to comply with 
requirements under other applicable state or Federal laws, including 
those governing the accessibility, privacy, or security of information 
required to be disclosed under this section, or those governing the 
ability of properly authorized representatives to access participant, 
or beneficiary information held by plans and issuers.
    (4) A group health plan or health insurance issuer will not fail to 
comply with this section solely because it, acting in good faith and 
with reasonable diligence, makes an error or omission in a disclosure 
required under paragraph (b) of this section, provided that the plan or 
issuer corrects the information as soon as practicable.
    (5) A group health plan or health insurance issuer will not fail to 
comply with this section solely because, despite acting in good faith 
and with reasonable diligence, its internet website is temporarily 
inaccessible, provided that the plan or issuer makes the information 
available as soon as practicable.
    (6) To the extent compliance with this section requires a group 
health plan or health insurance issuer to obtain information from any 
other entity, the plan or issuer will not fail to comply with this 
section because it relied in good faith on information from the other 
entity, unless the plan or issuer knows, or reasonably should have 
known, that

[[Page 72300]]

the information is incomplete or inaccurate.
    (d) Severability. Any provision of this section held to be invalid 
or unenforceable by its terms, or as applied to any person or 
circumstance, or stayed pending further agency action, shall be 
severable from this section and shall not affect the remainder thereof 
or the application of the provision to persons not similarly situated 
or to dissimilar circumstances.

DEPARTMENT OF LABOR

    For the reasons set forth in this preamble, the Department of Labor 
amends 29 CFR part 2590 as set forth below:

PART 2590--RULES AND REGULATIONS FOR GROUP HEALTH PLANS

0
3. The authority citation for part 2590 continues to read as follows:

    Authority: 29 U.S.C. 1027, 1059, 1135, 1161-1168, 1169, 1181-
1183, 1181 note, 1185, 1185a, 1185b, 1191, 1191a, 1191b, and 1191c; 
sec. 101(g), Pub. L. 104-191, 110 Stat. 1936; sec. 401(b), Pub. L. 
105-200, 112 Stat. 645 (42 U.S.C. 651 note); sec. 512(d), Pub. L. 
110-343, 122 Stat. 3881; sec. 1001, 1201, and 1562(e), Pub. L. 111-
148, 124 Stat. 119, as amended by Pub. L. 111-152, 124 Stat. 1029; 
Division M, Pub. L. 113-235, 128 Stat. 2130; Secretary of Labor's 
Order 1-2011, 77 FR 1088 (Jan. 9, 2012).


0
4. Sections 2590.715-2715A1, 2590.715-2715A2, and 2590.715-2715A3 are 
added to read as follows:


Sec.  2590.715-2715A1  Transparency in coverage--definitions.

    (a) Scope and definitions--(1) Scope. This section sets forth 
definitions for the price transparency requirements for group health 
plans and health insurance issuers offering group health insurance 
coverage established in this section and Sec. Sec.  2590.715-2715A2 and 
2590.715-2715A3.
    (2) Definitions. For purposes of this section and Sec. Sec.  
2590.715-2715A2 and 2590.715-2715A3, the following definitions apply:
    (i) Accumulated amounts means:
    (A) The amount of financial responsibility a participant or 
beneficiary has incurred at the time a request for cost-sharing 
information is made, with respect to a deductible or out-of-pocket 
limit. If an individual is enrolled in other than self-only coverage, 
these accumulated amounts shall include the financial responsibility a 
participant or beneficiary has incurred toward meeting his or her 
individual deductible or out-of-pocket limit, as well as the amount of 
financial responsibility that all the individuals enrolled under the 
plan or coverage have incurred, in aggregate, toward meeting the other 
than self-only deductible or out-of-pocket limit, as applicable. 
Accumulated amounts include any expense that counts toward a deductible 
or out-of-pocket limit (such as a copayment or coinsurance), but 
exclude any expense that does not count toward a deductible or out-of-
pocket limit (such as any premium payment, out-of-pocket expense for 
out-of-network services, or amount for items or services not covered 
under the group health plan or health insurance coverage); and
    (B) To the extent a group health plan or health insurance issuer 
imposes a cumulative treatment limitation on a particular covered item 
or service (such as a limit on the number of items, days, units, 
visits, or hours covered in a defined time period) independent of 
individual medical necessity determinations, the amount that has 
accrued toward the limit on the item or service (such as the number of 
items, days, units, visits, or hours the participant or beneficiary, 
has used within that time period).
    (ii) Billed charge means the total charges for an item or service 
billed to a group health plan or health insurance issuer by a provider.
    (iii) Billing code means the code used by a group health plan or 
health insurance issuer or provider to identify health care items or 
services for purposes of billing, adjudicating, and paying claims for a 
covered item or service, including the Current Procedural Terminology 
(CPT) code, Healthcare Common Procedure Coding System (HCPCS) code, 
Diagnosis-Related Group (DRG) code, National Drug Code (NDC), or other 
common payer identifier.
    (iv) Bundled payment arrangement means a payment model under which 
a provider is paid a single payment for all covered items and services 
provided to a participant or beneficiary for a specific treatment or 
procedure.
    (v) Copayment assistance means the financial assistance a 
participant or beneficiary receives from a prescription drug or medical 
supply manufacturer towards the purchase of a covered item or service.
    (vi) Cost-sharing liability means the amount a participant or 
beneficiary is responsible for paying for a covered item or service 
under the terms of the group health plan or health insurance coverage. 
Cost-sharing liability generally includes deductibles, coinsurance, and 
copayments, but does not include premiums, balance billing amounts by 
out-of-network providers, or the cost of items or services that are not 
covered under a group health plan or health insurance coverage.
    (vii) Cost-sharing information means information related to any 
expenditure required by or on behalf of a participant or beneficiary 
with respect to health care benefits that are relevant to a 
determination of the participant's or beneficiary's cost-sharing 
liability for a particular covered item or service.
    (viii) Covered items or services means those items or services, 
including prescription drugs, the costs for which are payable, in whole 
or in part, under the terms of a group health plan or health insurance 
coverage.
    (ix) Derived amount means the price that a group health plan or 
health insurance issuer assigns to an item or service for the purpose 
of internal accounting, reconciliation with providers, or submitting 
data in accordance with the requirements of 45 CFR 153.710(c).
    (x) Historical net price means the retrospective average amount a 
group health plan or health insurance issuer paid for a prescription 
drug, inclusive of any reasonably allocated rebates, discounts, 
chargebacks, fees, and any additional price concessions received by the 
plan or issuer with respect to the prescription drug. The allocation 
shall be determined by dollar value for non-product specific and 
product-specific rebates, discounts, chargebacks, fees, and other price 
concessions to the extent that the total amount of any such price 
concession is known to the group health plan or health insurance issuer 
at the time of publication of the historical net price in a machine-
readable file in accordance with Sec.  2590.715-2715A3. However, to the 
extent that the total amount of any non-product specific and product-
specific rebates, discounts, chargebacks, fees, or other price 
concessions is not known to the group health plan or health insurance 
issuer at the time of file publication, then the plan or issuer shall 
allocate such rebates, discounts, chargebacks, fees, and other price 
concessions by using a good faith, reasonable estimate of the average 
price concessions based on the rebates, discounts, chargebacks, fees, 
and other price concessions received over a time period prior to the 
current reporting period and of equal duration to the current reporting 
period, as determined under Sec.  2590.715-2715A3(b)(1)(iii)(D)(3).
    (xi) In-network provider means any provider of any item or service 
with which a group health plan or health insurance issuer, or a third 
party for the plan or issuer, has a contract setting forth the terms 
and conditions on which

[[Page 72301]]

a relevant item or service is provided to a participant or beneficiary.
    (xii) Items or services means all encounters, procedures, medical 
tests, supplies, prescription drugs, durable medical equipment, and 
fees (including facility fees), provided or assessed in connection with 
the provision of health care.
    (xiii) Machine-readable file means a digital representation of data 
or information in a file that can be imported or read by a computer 
system for further processing without human intervention, while 
ensuring no semantic meaning is lost.
    (xiv) National Drug Code means the unique 10- or 11-digit 3-segment 
number assigned by the Food and Drug Administration, which provides a 
universal product identifier for drugs in the United States.
    (xv) Negotiated rate means the amount a group health plan or health 
insurance issuer has contractually agreed to pay an in-network 
provider, including an in-network pharmacy or other prescription drug 
dispenser, for covered items and services, whether directly or 
indirectly, including through a third-party administrator or pharmacy 
benefit manager.
    (xvi) Out-of-network allowed amount means the maximum amount a 
group health plan or health insurance issuer will pay for a covered 
item or service furnished by an out-of-network provider.
    (xvii) Out-of-network provider means a provider of any item or 
service that does not have a contract under a participant's or 
beneficiary's group health plan or health insurance coverage to provide 
items or services.
    (xviii) Out-of-pocket limit means the maximum amount that a 
participant or beneficiary is required to pay during a coverage period 
for his or her share of the costs of covered items and services under 
his or her group health plan or health insurance coverage, including 
for self-only and other than self-only coverage, as applicable.
    (xix) Plain language means written and presented in a manner 
calculated to be understood by the average participant or beneficiary.
    (xx) Prerequisite means concurrent review, prior authorization, and 
step-therapy or fail-first protocols related to covered items and 
services that must be satisfied before a group health plan or health 
insurance issuer will cover the item or service. The term prerequisite 
does not include medical necessity determinations generally or other 
forms of medical management techniques.
    (xxi) Underlying fee schedule rate means the rate for a covered 
item or service from a particular in-network provider, or providers 
that a group health plan or health insurance issuer uses to determine a 
participant's or beneficiary's cost-sharing liability for the item or 
service, when that rate is different from the negotiated rate or 
derived amount.
    (b) [Reserved]


Sec.  2590.715-2715A2  Transparency in coverage--required disclosures 
to participants and beneficiaries.

    (a) Scope and definitions--(1) Scope. This section establishes 
price transparency requirements for group health plans and health 
insurance issuers offering group health insurance coverage for the 
timely disclosure of information about costs related to covered items 
and services under a group plan or health insurance coverage.
    (2) Definitions. For purposes of this section, the definitions in 
Sec.  2590.715-2715A1 apply.
    (b) Required disclosures to participants and beneficiaries. At the 
request of a participant or beneficiary who is enrolled in a group 
health plan, the plan must provide to the participant or beneficiary 
the information required under paragraph (b)(1) of this section, in 
accordance with the method and format requirements set forth in 
paragraph (b)(2) of this section.
    (1) Required cost-sharing information. The information required 
under this paragraph (b)(1) is the following cost-sharing information, 
which is accurate at the time the request is made, with respect to a 
participant's or beneficiary's cost-sharing liability for covered items 
and services:
    (i) An estimate of the participant's or beneficiary's cost-sharing 
liability for a requested covered item or service furnished by a 
provider or providers that is calculated based on the information 
described in paragraphs (b)(1)(ii) through (iv) of this section.
    (A) If the request for cost-sharing information relates to items 
and services that are provided within a bundled payment arrangement, 
and the bundled payment arrangement includes items or services that 
have a separate cost-sharing liability, the group health plan or health 
insurance issuer must provide estimates of the cost-sharing liability 
for the requested covered item or service, as well as an estimate of 
the cost-sharing liability for each of the items and services in the 
bundled payment arrangement that have separate cost-sharing 
liabilities. While group health plans and health insurance issuers are 
not required to provide estimates of cost-sharing liability for a 
bundled payment arrangement where the cost-sharing is imposed 
separately for each item and service included in the bundled payment 
arrangement, nothing prohibits plans or issuers from providing 
estimates for multiple items and services in situations where such 
estimates could be relevant to participants or beneficiaries, as long 
as the plan or issuer also discloses information about the relevant 
items or services individually, as required in paragraph (b)(1)(v) of 
this section.
    (B) For requested items and services that are recommended 
preventive services under section 2713 of the Public Health Service Act 
(PHS Act), if the group health plan or health insurance issuer cannot 
determine whether the request is for preventive or non-preventive 
purposes, the plan or issuer must display the cost-sharing liability 
that applies for non-preventive purposes. As an alternative, a group 
health plan or health insurance issuer may allow a participant or 
beneficiary to request cost-sharing information for the specific 
preventive or non-preventive item or service by including terms such as 
``preventive'', ``non-preventive'' or ``diagnostic'' as a means to 
request the most accurate cost-sharing information.
    (ii) Accumulated amounts.
    (iii) In-network rate, comprised of the following elements, as 
applicable to the group health plan's or health insurance issuer's 
payment model:
    (A) Negotiated rate, reflected as a dollar amount, for an in-
network provider or providers for the requested covered item or 
service; this rate must be disclosed even if it is not the rate the 
plan or issuer uses to calculate cost-sharing liability; and
    (B) Underlying fee schedule rate, reflected as a dollar amount, for 
the requested covered item or service, to the extent that it is 
different from the negotiated rate.
    (iv) Out-of-network allowed amount or any other rate that provides 
a more accurate estimate of an amount a group health plan or health 
insurance issuer will pay for the requested covered item or service, 
reflected as a dollar amount, if the request for cost-sharing 
information is for a covered item or service furnished by an out-of-
network provider; provided, however, that in circumstances in which a 
plan or issuer reimburses an out-of-network provider a percentage of 
the billed charge for a covered item or service, the out-of-network 
allowed amount will be that percentage.
    (v) If a participant or beneficiary requests information for an 
item or service subject to a bundled payment arrangement, a list of the 
items and

[[Page 72302]]

services included in the bundled payment arrangement for which cost-
sharing information is being disclosed.
    (vi) If applicable, notification that coverage of a specific item 
or service is subject to a prerequisite.
    (vii) A notice that includes the following information in plain 
language:
    (A) A statement that out-of-network providers may bill participants 
or beneficiaries for the difference between a provider's billed charges 
and the sum of the amount collected from the group health plan or 
health insurance issuer and from the participant or beneficiary in the 
form of a copayment or coinsurance amount (the difference referred to 
as balance billing), and that the cost-sharing information provided 
pursuant to this paragraph (b)(1) does not account for these potential 
additional amounts. This statement is only required if balance billing 
is permitted under state law;
    (B) A statement that the actual charges for a participant's or 
beneficiary's covered item or service may be different from an estimate 
of cost-sharing liability provided pursuant to paragraph (b)(1)(i) of 
this section, depending on the actual items or services the participant 
or beneficiary receives at the point of care;
    (C) A statement that the estimate of cost-sharing liability for a 
covered item or service is not a guarantee that benefits will be 
provided for that item or service;
    (D) A statement disclosing whether the plan counts copayment 
assistance and other third-party payments in the calculation of the 
participant's or beneficiary's deductible and out-of-pocket maximum;
    (E) For items and services that are recommended preventive services 
under section 2713 of the PHS Act, a statement that an in-network item 
or service may not be subject to cost-sharing if it is billed as a 
preventive service if the group health plan or health insurance issuer 
cannot determine whether the request is for a preventive or non-
preventive item or service; and
    (F) Any additional information, including other disclaimers, that 
the group health plan or health insurance issuer determines is 
appropriate, provided the additional information does not conflict with 
the information required to be provided by this paragraph (b)(1).
    (2) Required methods and formats for disclosing information to 
participants and beneficiaries. The methods and formats for the 
disclosure required under this paragraph (b) are as follows:
    (i) Internet-based self-service tool. Information provided under 
this paragraph (b) must be made available in plain language, without 
subscription or other fee, through a self-service tool on an internet 
website that provides real-time responses based on cost-sharing 
information that is accurate at the time of the request. Group health 
plans and health insurance issuers must ensure that the self-service 
tool allows users to:
    (A) Search for cost-sharing information for a covered item or 
service provided by a specific in-network provider or by all in-network 
providers by inputting:
    (1) A billing code (such as CPT code 87804) or a descriptive term 
(such as ``rapid flu test''), at the option of the user;
    (2) The name of the in-network provider, if the user seeks cost-
sharing information with respect to a specific in-network provider; and
    (3) Other factors utilized by the plan or issuer that are relevant 
for determining the applicable cost-sharing information (such as 
location of service, facility name, or dosage).
    (B) Search for an out-of-network allowed amount, percentage of 
billed charges, or other rate that provides a reasonably accurate 
estimate of the amount a group health plan or health insurance issuer 
will pay for a covered item or service provided by out-of-network 
providers by inputting:
    (1) A billing code or descriptive term, at the option of the user; 
and
    (2) Other factors utilized by the plan or issuer that are relevant 
for determining the applicable out-of-network allowed amount or other 
rate (such as the location in which the covered item or service will be 
sought or provided).
    (C) Refine and reorder search results based on geographic proximity 
of in-network providers, and the amount of the participant's or 
beneficiary's estimated cost-sharing liability for the covered item or 
service, to the extent the search for cost-sharing information for 
covered items or services returns multiple results.
    (ii) Paper method. Information provided under this paragraph (b) 
must be made available in plain language, without a fee, in paper form 
at the request of the participant or beneficiary. In responding to such 
a request, the group health plan or health insurance issuer may limit 
the number of providers with respect to which cost-sharing information 
for covered items and services is provided to no fewer than 20 
providers per request. The group health plan or health insurance issuer 
is required to:
    (A) Disclose the applicable provider-per-request limit to the 
participant or beneficiary;
    (B) Provide the cost-sharing information in paper form pursuant to 
the individual's request, in accordance with the requirements in 
paragraphs (b)(2)(i)(A) through (C) of this section; and
    (C) Mail the cost-sharing information in paper form no later than 2 
business days after an individual's request is received.
    (D) To the extent participants or beneficiaries request disclosure 
other than by paper (for example, by phone or email), plans and issuers 
may provide the disclosure through another means, provided the 
participant or beneficiary agrees that disclosure through such means is 
sufficient to satisfy the request and the request is fulfilled at least 
as rapidly as required for the paper method.
    (3) Special rule to prevent unnecessary duplication--(i) Special 
rule for insured group health plans. To the extent coverage under a 
group health plan consists of group health insurance coverage, the plan 
satisfies the requirements of this paragraph (b) if the plan requires 
the health insurance issuer offering the coverage to provide the 
information required by this paragraph (b) in compliance with this 
section pursuant to a written agreement. Accordingly, if a health 
insurance issuer and a plan sponsor enter into a written agreement 
under which the issuer agrees to provide the information required under 
this paragraph (b) in compliance with this section, and the issuer 
fails to do so, then the issuer, but not the plan, violates the 
transparency disclosure requirements of this paragraph (b).
    (ii) Other contractual arrangements. A group health plan or health 
insurance issuer may satisfy the requirements under this paragraph (b) 
by entering into a written agreement under which another party (such as 
a pharmacy benefit manager or other third-party) provides the 
information required by this paragraph (b) in compliance with this 
section. Notwithstanding the preceding sentence, if a group health plan 
or health insurance issuer chooses to enter into such an agreement and 
the party with which it contracts fails to provide the information in 
compliance with this paragraph (b), the plan or issuer violates the 
transparency disclosure requirements of this paragraph (b).
    (c) Applicability. (1) The provisions of this section apply for 
plan years beginning on or after January 1, 2023 with respect to the 
500 items and services to be posted on a publicly available website, 
and with respect to all covered items and services, for plan

[[Page 72303]]

years beginning on or after January 1, 2024.
    (2) As provided under Sec.  2590.715-1251, this section does not 
apply to grandfathered health plans. This section also does not apply 
to health reimbursement arrangements or other account-based group 
health plans as defined in Sec.  [thinsp]2590.715-2711(d)(6) or short 
term limited duration insurance as defined in Sec.  2590.701-2.
    (3) Nothing in this section alters or otherwise affects a group 
health plan's or health insurance issuer's duty to comply with 
requirements under other applicable state or Federal laws, including 
those governing the accessibility, privacy, or security of information 
required to be disclosed under this section, or those governing the 
ability of properly authorized representatives to access participant or 
beneficiary information held by plans and issuers.
    (4) A group health plan or health insurance issuer will not fail to 
comply with this section solely because it, acting in good faith and 
with reasonable diligence, makes an error or omission in a disclosure 
required under paragraph (b) of this section, provided that the plan or 
issuer corrects the information as soon as practicable.
    (5) A group health plan or health insurance issuer will not fail to 
comply with this section solely because, despite acting in good faith 
and with reasonable diligence, its internet website is temporarily 
inaccessible, provided that the plan or issuer makes the information 
available as soon as practicable.
    (6) To the extent compliance with this section requires a group 
health plan or health insurance issuer to obtain information from any 
other entity, the plan or issuer will not fail to comply with this 
section because it relied in good faith on information from the other 
entity, unless the plan or issuer knows, or reasonably should have 
known, that the information is incomplete or inaccurate.
    (d) Severability. Any provision of this section held to be invalid 
or unenforceable by its terms, or as applied to any person or 
circumstance, or stayed pending further agency action, shall be 
severable from this section and shall not affect the remainder thereof 
or the application of the provision to persons not similarly situated 
or to dissimilar circumstances.


Sec.  2590.715-2715A3  Transparency in coverage--requirements for 
public disclosure.

    (a) Scope and definitions--(1) Scope. This section establishes 
price transparency requirements for group health plans and health 
insurance issuers offering group health insurance coverage for the 
timely disclosure of information about costs related to covered items 
and services under a group plan or health insurance coverage.
    (2) Definitions. For purposes of this section, the definitions in 
Sec.  2590.715-2715A1 apply.
    (b) Requirements for public disclosure of in-network provider rates 
for covered items and services, out-of-network allowed amounts and 
billed charges for covered items and services, and negotiated rates and 
historical net prices for covered prescription drugs. A group health 
plan or health insurance issuer must make available on an internet 
website the information required under paragraph (b)(1) of this section 
in three machine-readable files, in accordance with the method and 
format requirements described in paragraph (b)(2) of this section, and 
that are updated as required under paragraph (b)(3) of this section.
    (1) Required information. Machine-readable files required under 
this paragraph (b) that are made available to the public by a group 
health plan or health insurance issuer must include:
    (i) An in-network rate machine-readable file that includes the 
required information under this paragraph (b)(1)(i) for all covered 
items and services, except for prescription drugs that are subject to a 
fee-for-service reimbursement arrangement, which must be reported in 
the prescription drug machine-readable file pursuant to paragraph 
(b)(1)(iii) of this section. The in-network rate machine-readable file 
must include:
    (A) For each coverage option offered by a group health plan or 
health insurance issuer, the name and the 14-digit Health Insurance 
Oversight System (HIOS) identifier, or, if the 14-digit HIOS identifier 
is not available, the 5-digit HIOS identifier, or if no HIOS identifier 
is available, the Employer Identification Number (EIN);
    (B) A billing code, which in the case of prescription drugs must be 
an NDC, and a plain language description for each billing code for each 
covered item or service under each coverage option offered by a plan or 
issuer; and
    (C) All applicable rates, which may include one or more of the 
following: Negotiated rates, underlying fee schedule rates, or derived 
amounts. If a group health plan or health insurance issuer does not use 
negotiated rates for provider reimbursement, then the plan or issuer 
should disclose derived amounts to the extent these amounts are already 
calculated in the normal course of business. If the group health plan 
or health insurance issuer uses underlying fee schedule rates for 
calculating cost sharing, then the plan or issuer should include the 
underlying fee schedule rates in addition to the negotiated rate or 
derived amount. Applicable rates, including for both individual items 
and services and items and services in a bundled payment arrangement, 
must be:
    (1) Reflected as dollar amounts, with respect to each covered item 
or service that is furnished by an in-network provider. If the 
negotiated rate is subject to change based upon participant or 
beneficiary-specific characteristics, these dollar amounts should be 
reflected as the base negotiated rate applicable to the item or service 
prior to adjustments for participant or beneficiary-specific 
characteristics;
    (2) Associated with the National Provider Identifier (NPI), Tax 
Identification Number (TIN), and Place of Service Code for each in-
network provider;
    (3) Associated with the last date of the contract term or 
expiration date for each provider-specific applicable rate that applies 
to each covered item or service; and
    (4) Indicated with a notation where a reimbursement arrangement 
other than a standard fee-for-service model (such as capitation or a 
bundled payment arrangement) applies.
    (ii) An out-of-network allowed amount machine-readable file, 
including:
    (A) For each coverage option offered by a group health plan or 
health insurance issuer, the name and the 14-digit HIOS identifier, or, 
if the 14-digit HIOS identifier is not available, the 5-digit HIOS 
identifier, or, if no HIOS identifier is available, the EIN;
    (B) A billing code, which in the case of prescription drugs must be 
an NDC, and a plain language description for each billing code for each 
covered item or service under each coverage option offered by a plan or 
issuer; and
    (C) Unique out-of-network allowed amounts and billed charges with 
respect to covered items or services furnished by out-of-network 
providers during the 90-day time period that begins 180 days prior to 
the publication date of the machine-readable file (except that a group 
health plan or health insurance issuer must omit such data in relation 
to a particular item or service and provider when compliance with this 
paragraph (b)(1)(ii)(C) would require the plan or issuer to report 
payment of out-of-network allowed amounts in connection with fewer than 
20 different claims for payments under a single plan or coverage). 
Consistent with paragraph

[[Page 72304]]

(c)(3) of this section, nothing in this paragraph (b)(1)(ii)(C) 
requires the disclosure of information that would violate any 
applicable health information privacy law. Each unique out-of-network 
allowed amount must be:
    (1) Reflected as a dollar amount, with respect to each covered item 
or service that is furnished by an out-of-network provider; and
    (2) Associated with the NPI, TIN, and Place of Service Code for 
each out-of-network provider.
    (iii) A prescription drug machine-readable file, including:
    (A) For each coverage option offered by a group health plan or 
health insurance issuer, the name and the 14-digit HIOS identifier, or, 
if the 14-digit HIOS identifier is not available, the 5-digit HIOS 
identifier, or, if no HIOS identifier is available, the EIN;
    (B) The NDC, and the proprietary and nonproprietary name assigned 
to the NDC by the Food and Drug Administration (FDA), for each covered 
item or service under each coverage option offered by a plan or issuer 
that is a prescription drug;
    (C) The negotiated rates which must be:
    (1) Reflected as a dollar amount, with respect to each NDC that is 
furnished by an in-network provider, including an in-network pharmacy 
or other prescription drug dispenser;
    (2) Associated with the NPI, TIN, and Place of Service Code for 
each in-network provider, including each in-network pharmacy or other 
prescription drug dispenser; and
    (3) Associated with the last date of the contract term for each 
provider-specific negotiated rate that applies to each NDC; and
    (D) Historical net prices that are:
    (1) Reflected as a dollar amount, with respect to each NDC that is 
furnished by an in-network provider, including an in-network pharmacy 
or other prescription drug dispenser;
    (2) Associated with the NPI, TIN, and Place of Service Code for 
each in-network provider, including each in-network pharmacy or other 
prescription drug dispenser; and
    (3) Associated with the 90-day time period that begins 180 days 
prior to the publication date of the machine-readable file for each 
provider-specific historical net price that applies to each NDC (except 
that a group health plan or health insurance issuer must omit such data 
in relation to a particular NDC and provider when compliance with this 
paragraph (b)(1)(iii)(D) would require the plan or issuer to report 
payment of historical net prices calculated using fewer than 20 
different claims for payment). Consistent with paragraph (c)(3) of this 
section, nothing in this paragraph (b)(1)(iii)(D) requires the 
disclosure of information that would violate any applicable health 
information privacy law.
    (2) Required method and format for disclosing information to the 
public. The machine-readable files described in this paragraph (b) must 
be available in a form and manner as specified in guidance issued by 
the Department of the Treasury, the Department of Labor, and the 
Department of Health and Human Services. The machine-readable files 
must be publicly available and accessible to any person free of charge 
and without conditions, such as establishment of a user account, 
password, or other credentials, or submission of personally 
identifiable information to access the file.
    (3) Timing. A group health plan or health insurance issuer must 
update the machine-readable files and information required by this 
paragraph (b) monthly. The group health plan or health insurance issuer 
must clearly indicate the date that the files were most recently 
updated.
    (4) Special rules to prevent unnecessary duplication--(i) Special 
rule for insured group health plans. To the extent coverage under a 
group health plan consists of group health insurance coverage, the plan 
satisfies the requirements of this paragraph (b) if the plan requires 
the health insurance issuer offering the coverage to provide the 
information pursuant to a written agreement. Accordingly, if a health 
insurance issuer and a group health plan sponsor enter into a written 
agreement under which the issuer agrees to provide the information 
required under this paragraph (b) in compliance with this section, and 
the issuer fails to do so, then the issuer, but not the plan, violates 
the transparency disclosure requirements of this paragraph (b).
    (ii) Other contractual arrangements. A group health plan or health 
insurance issuer may satisfy the requirements under this paragraph (b) 
by entering into a written agreement under which another party (such as 
a third-party administrator or health care claims clearinghouse) will 
provide the information required by this paragraph (b) in compliance 
with this section. Notwithstanding the preceding sentence, if a group 
health plan or health insurance issuer chooses to enter into such an 
agreement and the party with which it contracts fails to provide the 
information in compliance with this paragraph (b), the plan or issuer 
violates the transparency disclosure requirements of this paragraph 
(b).
    (iii) Aggregation permitted for out-of-network allowed amounts. 
Nothing in this section prohibits a group health plan or health 
insurance issuer from satisfying the disclosure requirement described 
in paragraph (b)(1)(ii) of this section by disclosing out-of-network 
allowed amounts made available by, or otherwise obtained from, an 
issuer, a service provider, or other party with which the plan or 
issuer has entered into a written agreement to provide the information, 
provided the minimum claim threshold described in paragraph 
(b)(1)(ii)(C) of this section is independently met for each item or 
service and for each plan or coverage included in an aggregated Allowed 
Amount File. Under such circumstances, health insurance issuers, 
service providers, or other parties with which the group health plan or 
issuer has contracted may aggregate out-of-network allowed amounts for 
more than one plan or insurance policy or contract. Additionally, 
nothing in this section prevents the Allowed Amount File from being 
hosted on a third-party website or prevents a plan administrator or 
issuer from contracting with a third party to post the file. However, 
if a plan or issuer chooses not to also host the file separately on its 
own website, it must provide a link on its own public website to the 
location where the file is made publicly available.
    (c) Applicability. (1) The provisions of this section apply for 
plan years beginning on or after January 1, 2022.
    (2) As provided under Sec.  2590.715-1251, this section does not 
apply to grandfathered health plans. This section also does not apply 
to health reimbursement arrangements or other account-based group 
health plans as defined in Sec.  [thinsp]2590.715-2711(d)(6) or short 
term limited duration insurance as defined in Sec.  2590.701-2.
    (3) Nothing in this section alters or otherwise affects a group 
health plan's or health insurance issuer's duty to comply with 
requirements under other applicable state or Federal laws, including 
those governing the accessibility, privacy, or security of information 
required to be disclosed under this section, or those governing the 
ability of properly authorized representatives to access participant, 
or beneficiary information held by plans and issuers.
    (4) A group health plan or health insurance issuer will not fail to 
comply with this section solely because it, acting in good faith and 
with reasonable diligence, makes an error or omission in a disclosure 
required under paragraph

[[Page 72305]]

(b) of this section, provided that the plan or issuer corrects the 
information as soon as practicable.
    (5) A group health plan or health insurance issuer will not fail to 
comply with this section solely because, despite acting in good faith 
and with reasonable diligence, its internet website is temporarily 
inaccessible, provided that the plan or issuer makes the information 
available as soon as practicable.
    (6) To the extent compliance with this section requires a group 
health plan or health insurance issuer to obtain information from any 
other entity, the plan or issuer will not fail to comply with this 
section because it relied in good faith on information from the other 
entity, unless the plan or issuer knows, or reasonably should have 
known, that the information is incomplete or inaccurate.
    (d) Severability. Any provision of this section held to be invalid 
or unenforceable by its terms, or as applied to any person or 
circumstance, or stayed pending further agency action, shall be 
severable from this section and shall not affect the remainder thereof 
or the application of the provision to persons not similarly situated 
or to dissimilar circumstances.

DEPARTMENT OF HEALTH AND HUMAN SERVICES

    For the reasons set forth in this preamble, the Department of 
Health and Human Services amends 45 CFR parts 147 and 158 as set forth 
below:

PART 147--HEALTH INSURANCE REFORM REQUIREMENTS FOR THE GROUP AND 
INDIVIDUAL HEALTH INSURANCE MARKETS

0
5. The authority citation for part 147 continues to read as follows:

    Authority: 42 U.S.C. 300gg through 300gg-63, 300gg-91, and 
300gg-92, as amended.


0
6. Sections 147.210, 147.211 and 147.212 are added to read as follows:


Sec.  147.210  Transparency in coverage--definitions.

    (a) Scope and definitions--(1) Scope. This section sets forth 
definitions for the price transparency requirements for group health 
plans and health insurance issuers in the individual and group markets 
established in this section and Sec. Sec.  147.211 and 147.212.
    (2) Definitions. For purposes of this section and Sec. Sec.  
147.211 and 147.212, the following definitions apply:
    (i) Accumulated amounts means:
    (A) The amount of financial responsibility a participant, 
beneficiary, or enrollee has incurred at the time a request for cost-
sharing information is made, with respect to a deductible or out-of-
pocket limit. If an individual is enrolled in other than self-only 
coverage, these accumulated amounts shall include the financial 
responsibility a participant, beneficiary, or enrollee has incurred 
toward meeting his or her individual deductible or out-of-pocket limit, 
as well as the amount of financial responsibility that all the 
individuals enrolled under the plan or coverage have incurred, in 
aggregate, toward meeting the other than self-only deductible or out-
of-pocket limit, as applicable. Accumulated amounts include any expense 
that counts toward a deductible or out-of-pocket limit (such as a 
copayment or coinsurance), but exclude any expense that does not count 
toward a deductible or out-of-pocket limit (such as any premium 
payment, out-of-pocket expense for out-of-network services, or amount 
for items or services not covered under the group health plan or health 
insurance coverage); and
    (B) To the extent a group health plan or health insurance issuer 
imposes a cumulative treatment limitation on a particular covered item 
or service (such as a limit on the number of items, days, units, 
visits, or hours covered in a defined time period) independent of 
individual medical necessity determinations, the amount that has 
accrued toward the limit on the item or service (such as the number of 
items, days, units, visits, or hours the participant, beneficiary, or 
enrollee has used within that time period).
    (ii) Billed charge means the total charges for an item or service 
billed to a group health plan or health insurance issuer by a provider.
    (iii) Billing code means the code used by a group health plan or 
health insurance issuer or provider to identify health care items or 
services for purposes of billing, adjudicating, and paying claims for a 
covered item or service, including the Current Procedural Terminology 
(CPT) code, Healthcare Common Procedure Coding System (HCPCS) code, 
Diagnosis-Related Group (DRG) code, National Drug Code (NDC), or other 
common payer identifier.
    (iv) Bundled payment arrangement means a payment model under which 
a provider is paid a single payment for all covered items and services 
provided to a participant, beneficiary, or enrollee for a specific 
treatment or procedure.
    (v) Copayment assistance means the financial assistance a 
participant, beneficiary, or enrollee receives from a prescription drug 
or medical supply manufacturer towards the purchase of a covered item 
or service.
    (vi) Cost-sharing liability means the amount a participant, 
beneficiary, or enrollee is responsible for paying for a covered item 
or service under the terms of the group health plan or health insurance 
coverage. Cost-sharing liability generally includes deductibles, 
coinsurance, and copayments, but does not include premiums, balance 
billing amounts by out-of-network providers, or the cost of items or 
services that are not covered under a group health plan or health 
insurance coverage.
    (vii) Cost-sharing information means information related to any 
expenditure required by or on behalf of a participant, beneficiary, or 
enrollee with respect to health care benefits that are relevant to a 
determination of the participant's, beneficiary's, or enrollee's cost-
sharing liability for a particular covered item or service.
    (viii) Covered items or services means those items or services, 
including prescription drugs, the costs for which are payable, in whole 
or in part, under the terms of a group health plan or health insurance 
coverage.
    (ix) Derived amount means the price that a group health plan or 
health insurance issuer assigns to an item or service for the purpose 
of internal accounting, reconciliation with providers or submitting 
data in accordance with the requirements of Sec.  153.710(c) of this 
subchapter.
    (x) Enrollee means an individual who is covered under an individual 
health insurance policy as defined under section 2791(b)(5) of the 
Public Health Service (PHS) Act.
    (xi) Historical net price means the retrospective average amount a 
group health plan or health insurance issuer paid for a prescription 
drug, inclusive of any reasonably allocated rebates, discounts, 
chargebacks, fees, and any additional price concessions received by the 
plan or issuer with respect to the prescription drug. The allocation 
shall be determined by dollar value for non-product specific and 
product-specific rebates, discounts, chargebacks, fees, and other price 
concessions to the extent that the total amount of any such price 
concession is known to the group health plan or health insurance issuer 
at the time of publication of the historical net price in a machine-
readable file in accordance with Sec.  147.212. However, to the extent 
that the total amount of any non-product specific and product-specific 
rebates, discounts, chargebacks, fees, or other price concessions is 
not known to the group health plan or health insurance issuer at the 
time of file publication, then the plan or issuer shall allocate such 
rebates, discounts, chargebacks, fees, and other price

[[Page 72306]]

concessions by using a good faith, reasonable estimate of the average 
price concessions based on the rebates, discounts, chargebacks, fees, 
and other price concessions received over a time period prior to the 
current reporting period and of equal duration to the current reporting 
period, as determined under Sec.  147.212(b)(1)(iii)(D)(3).
    (xii) In-network provider means any provider of any item or service 
with which a group health plan or health insurance issuer, or a third 
party for the plan or issuer, has a contract setting forth the terms 
and conditions on which a relevant item or service is provided to a 
participant, beneficiary, or enrollee.
    (xiii) Items or services means all encounters, procedures, medical 
tests, supplies, prescription drugs, durable medical equipment, and 
fees (including facility fees), provided or assessed in connection with 
the provision of health care.
    (xiv) Machine-readable file means a digital representation of data 
or information in a file that can be imported or read by a computer 
system for further processing without human intervention, while 
ensuring no semantic meaning is lost.
    (xv) National Drug Code means the unique 10- or 11-digit 3-segment 
number assigned by the Food and Drug Administration, which provides a 
universal product identifier for drugs in the United States.
    (xvi) Negotiated rate means the amount a group health plan or 
health insurance issuer has contractually agreed to pay an in-network 
provider, including an in-network pharmacy or other prescription drug 
dispenser, for covered items and services, whether directly or 
indirectly, including through a third-party administrator or pharmacy 
benefit manager.
    (xvii) Out-of-network allowed amount means the maximum amount a 
group health plan or health insurance issuer will pay for a covered 
item or service furnished by an out-of-network provider.
    (xviii) Out-of-network provider means a provider of any item or 
service that does not have a contract under a participant's, 
beneficiary's, or enrollee's group health plan or health insurance 
coverage to provide items or services.
    (xix) Out-of-pocket limit means the maximum amount that a 
participant, beneficiary, or enrollee is required to pay during a 
coverage period for his or her share of the costs of covered items and 
services under his or her group health plan or health insurance 
coverage, including for self-only and other than self-only coverage, as 
applicable.
    (xx) Plain language means written and presented in a manner 
calculated to be understood by the average participant, beneficiary, or 
enrollee.
    (xxi) Prerequisite means concurrent review, prior authorization, 
and step-therapy or fail-first protocols related to covered items and 
services that must be satisfied before a group health plan or health 
insurance issuer will cover the item or service. The term prerequisite 
does not include medical necessity determinations generally or other 
forms of medical management techniques.
    (xxii) Underlying fee schedule rate means the rate for a covered 
item or service from a particular in-network provider, or providers 
that a group health plan or health insurance issuer uses to determine a 
participant's, beneficiary's, or enrollee's cost-sharing liability for 
the item or service, when that rate is different from the negotiated 
rate or derived amount.
    (b) [Reserved]


Sec.  147.211   Transparency in coverage--required disclosures to 
participants, beneficiaries, or enrollees.

    (a) Scope and definitions--(1) Scope. This section establishes 
price transparency requirements for group health plans and health 
insurance issuers in the individual and group markets for the timely 
disclosure of information about costs related to covered items and 
services under a plan or health insurance coverage.
    (2) Definitions. For purposes of this section, the definitions in 
Sec.  147.210 apply.
    (b) Required disclosures to participants, beneficiaries, or 
enrollees. At the request of a participant, beneficiary, or enrollee 
who is enrolled in a group health plan or health insurance issuer 
offering group or individual health insurance coverage, the plan or 
issuer must provide to the participant, beneficiary, or enrollee the 
information required under paragraph (b)(1) of this section, in 
accordance with the method and format requirements set forth in 
paragraph (b)(2) of this section.
    (1) Required cost-sharing information. The information required 
under this paragraph (b)(1) is the following cost-sharing information, 
which is accurate at the time the request is made, with respect to a 
participant's, beneficiary's, or enrollee's cost-sharing liability for 
covered items and services:
    (i) An estimate of the participant's, beneficiary's, or enrollee's 
cost-sharing liability for a requested covered item or service 
furnished by a provider or providers, which must reflect any cost-
sharing reductions the enrollee would receive, that is calculated based 
on the information described in paragraphs (b)(1)(ii) through (iv) of 
this section.
    (A) If the request for cost-sharing information relates to items 
and services that are provided within a bundled payment arrangement, 
and the bundled payment arrangement includes items or services that 
have a separate cost-sharing liability, the group health plan or health 
insurance issuer must provide estimates of the cost-sharing liability 
for the requested covered item or service, as well as an estimate of 
the cost-sharing liability for each of the items and services in the 
bundled payment arrangement that have separate cost-sharing 
liabilities. While group health plans and health insurance issuers are 
not required to provide estimates of cost-sharing liability for a 
bundled payment arrangement where the cost-sharing is imposed 
separately for each item and service included in the bundled payment 
arrangement, nothing prohibits plans or issuers from providing 
estimates for multiple items and services in situations where such 
estimates could be relevant to participants or beneficiaries, as long 
as the plan or issuer also discloses information about the relevant 
items or services individually, as required in paragraph (b)(1)(v) of 
this section.
    (B) For requested items and services that are recommended 
preventive services under section 2713 of the Public Health Service Act 
(PHS Act), if the group health plan or health insurance issuer cannot 
determine whether the request is for preventive or non-preventive 
purposes, the plan or issuer must display the cost-sharing liability 
that applies for non-preventive purposes. As an alternative, a group 
health plan or health insurance issuer may allow a participant, 
beneficiary, or enrollee to request cost-sharing information for the 
specific preventive or non-preventive item or service by including 
terms such as ``preventive'', ``non-preventive'' or ``diagnostic'' as a 
means to request the most accurate cost-sharing information.
    (ii) Accumulated amounts.
    (iii) In-network rate, comprised of the following elements, as 
applicable to the group health plan's or health insurance issuer's 
payment model:
    (A) Negotiated rate, reflected as a dollar amount, for an in-
network provider or providers for the requested covered item or 
service; this rate must be disclosed even if it is not the rate the 
plan or issuer uses to calculate cost-sharing liability; and
    (B) Underlying fee schedule rate, reflected as a dollar amount, for 
the requested covered item or service, to the

[[Page 72307]]

extent that it is different from the negotiated rate.
    (iv) Out-of-network allowed amount or any other rate that provides 
a more accurate estimate of an amount a group health plan or health 
insurance issuer will pay for the requested covered item or service, 
reflected as a dollar amount, if the request for cost-sharing 
information is for a covered item or service furnished by an out-of-
network provider; provided, however, that in circumstances in which a 
plan or issuer reimburses an out-of-network provider a percentage of 
the billed charge for a covered item or service, the out-of-network 
allowed amount will be that percentage.
    (v) If a participant, beneficiary, or enrollee requests information 
for an item or service subject to a bundled payment arrangement, a list 
of the items and services included in the bundled payment arrangement 
for which cost-sharing information is being disclosed.
    (vi) If applicable, notification that coverage of a specific item 
or service is subject to a prerequisite.
    (vii) A notice that includes the following information in plain 
language:
    (A) A statement that out-of-network providers may bill 
participants, beneficiaries, or enrollees for the difference between a 
provider's billed charges and the sum of the amount collected from the 
group health plan or health insurance issuer and from the participant, 
beneficiary, or enrollee in the form of a copayment or coinsurance 
amount (the difference referred to as balance billing), and that the 
cost-sharing information provided pursuant to this paragraph (b)(1) 
does not account for these potential additional amounts. This statement 
is only required if balance billing is permitted under state law;
    (B) A statement that the actual charges for a participant's, 
beneficiary's, or enrollee's covered item or service may be different 
from an estimate of cost-sharing liability provided pursuant to 
paragraph (b)(1)(i) of this section, depending on the actual items or 
services the participant, beneficiary, or enrollee receives at the 
point of care;
    (C) A statement that the estimate of cost-sharing liability for a 
covered item or service is not a guarantee that benefits will be 
provided for that item or service;
    (D) A statement disclosing whether the plan counts copayment 
assistance and other third-party payments in the calculation of the 
participant's, beneficiary's, or enrollee's deductible and out-of-
pocket maximum;
    (E) For items and services that are recommended preventive services 
under section 2713 of the PHS Act, a statement that an in-network item 
or service may not be subject to cost-sharing if it is billed as a 
preventive service if the group health plan or health insurance issuer 
cannot determine whether the request is for a preventive or non-
preventive item or service; and
    (F) Any additional information, including other disclaimers, that 
the group health plan or health insurance issuer determines is 
appropriate, provided the additional information does not conflict with 
the information required to be provided by this paragraph (b)(1).
    (2) Required methods and formats for disclosing information to 
participants, beneficiaries, or enrollees. The methods and formats for 
the disclosure required under this paragraph (b) are as follows:
    (i) Internet-based self-service tool. Information provided under 
this paragraph (b) must be made available in plain language, without 
subscription or other fee, through a self-service tool on an internet 
website that provides real-time responses based on cost-sharing 
information that is accurate at the time of the request. Group health 
plans and health insurance issuers must ensure that the self-service 
tool allows users to:
    (A) Search for cost-sharing information for a covered item or 
service provided by a specific in-network provider or by all in-network 
providers by inputting:
    (1) A billing code (such as CPT code 87804) or a descriptive term 
(such as ``rapid flu test''), at the option of the user;
    (2) The name of the in-network provider, if the user seeks cost-
sharing information with respect to a specific in-network provider; and
    (3) Other factors utilized by the plan or issuer that are relevant 
for determining the applicable cost-sharing information (such as 
location of service, facility name, or dosage).
    (B) Search for an out-of-network allowed amount, percentage of 
billed charges, or other rate that provides a reasonably accurate 
estimate of the amount a group health plan or health insurance issuer 
will pay for a covered item or service provided by out-of-network 
providers by inputting:
    (1) A billing code or descriptive term, at the option of the user; 
and
    (2) Other factors utilized by the plan or issuer that are relevant 
for determining the applicable out-of-network allowed amount or other 
rate (such as the location in which the covered item or service will be 
sought or provided).
    (C) Refine and reorder search results based on geographic proximity 
of in-network providers, and the amount of the participant's, 
beneficiary's, or enrollee's estimated cost-sharing liability for the 
covered item or service, to the extent the search for cost-sharing 
information for covered items or services returns multiple results.
    (ii) Paper method. Information provided under this paragraph (b) 
must be made available in plain language, without a fee, in paper form 
at the request of the participant, beneficiary, or enrollee. In 
responding to such a request, the group health plan or health insurance 
issuer may limit the number of providers with respect to which cost-
sharing information for covered items and services is provided to no 
fewer than 20 providers per request. The group health plan or health 
insurance issuer is required to:
    (A) Disclose the applicable provider-per-request limit to the 
participant, beneficiary, or enrollee;
    (B) Provide the cost-sharing information in paper form pursuant to 
the individual's request, in accordance with the requirements in 
paragraphs (b)(2)(i)(A) through (C) of this section; and
    (C) Mail the cost-sharing information in paper form no later than 2 
business days after an individual's request is received.
    (D) To the extent participants, beneficiaries, and enrollees 
request disclosure other than by paper (for example, by phone or 
email), plans and issuers may provide the disclosure through another 
means, provided the participant, beneficiary, or enrollee agrees that 
disclosure through such means is sufficient to satisfy the request and 
the request is fulfilled at least as rapidly as required for the paper 
method.
    (3) Special rule to prevent unnecessary duplication--(i) Special 
rule for insured group health plans. To the extent coverage under a 
group health plan consists of group health insurance coverage, the plan 
satisfies the requirements of this paragraph (b) if the plan requires 
the health insurance issuer offering the coverage to provide the 
information required by this paragraph (b) in compliance with this 
section pursuant to a written agreement. Accordingly, if a health 
insurance issuer and a plan sponsor enter into a written agreement 
under which the issuer agrees to provide the information required under 
this paragraph (b) in compliance with this section, and the issuer 
fails to do so, then the issuer, but not the plan, violates the 
transparency disclosure requirements of this paragraph (b).

[[Page 72308]]

    (ii) Other contractual arrangements. A group health plan or health 
insurance issuer may satisfy the requirements under this paragraph (b) 
by entering into a written agreement under which another party (such as 
a pharmacy benefit manager or other third-party) provides the 
information required by this paragraph (b) in compliance with this 
section. Notwithstanding the preceding sentence, if a group health plan 
or health insurance issuer chooses to enter into such an agreement and 
the party with which it contracts fails to provide the information in 
compliance with this paragraph (b), the plan or issuer violates the 
transparency disclosure requirements of this paragraph (b).
    (c) Applicability. (1) The provisions of this section apply for 
plan years (in the individual market, for policy years) beginning on or 
after January 1, 2023 with respect to the 500 items and services to be 
posted on a publicly available website, and with respect to all covered 
items and services, for plan years (in the individual market, for 
policy years) beginning on or after January 1, 2024.
    (2) As provided under Sec.  147.140, this section does not apply to 
grandfathered health plans. This section also does not apply to health 
reimbursement arrangements or other account-based group health plans as 
defined in Sec.  147.126(d)(6) or short term limited duration insurance 
as defined in 45 CFR 144.103.
    (3) Nothing in this section alters or otherwise affects a group 
health plan's or health insurance issuer's duty to comply with 
requirements under other applicable state or Federal laws, including 
those governing the accessibility, privacy, or security of information 
required to be disclosed under this section, or those governing the 
ability of properly authorized representatives to access participant, 
beneficiary, or enrollee information held by plans and issuers.
    (4) A group health plan or health insurance issuer will not fail to 
comply with this section solely because it, acting in good faith and 
with reasonable diligence, makes an error or omission in a disclosure 
required under paragraph (b) of this section, provided that the plan or 
issuer corrects the information as soon as practicable.
    (5) A group health plan or health insurance issuer will not fail to 
comply with this section solely because, despite acting in good faith 
and with reasonable diligence, its internet website is temporarily 
inaccessible, provided that the plan or issuer makes the information 
available as soon as practicable.
    (6) To the extent compliance with this section requires a group 
health plan or health insurance issuer to obtain information from any 
other entity, the plan or issuer will not fail to comply with this 
section because it relied in good faith on information from the other 
entity, unless the plan or issuer knows, or reasonably should have 
known, that the information is incomplete or inaccurate.
    (d) Severability. Any provision of this section held to be invalid 
or unenforceable by its terms, or as applied to any person or 
circumstance, or stayed pending further agency action, shall be 
severable from this section and shall not affect the remainder thereof 
or the application of the provision to persons not similarly situated 
or to dissimilar circumstances.


Sec.  147.212   Transparency in coverage--requirements for public 
disclosure.

    (a) Scope and definitions--(1) Scope. This section establishes 
price transparency requirements for group health plans and health 
insurance issuers in the individual and group markets for the timely 
disclosure of information about costs related to covered items and 
services under a plan or health insurance coverage.
    (2) Definitions. For purposes of this section, the definitions in 
Sec.  147.210 apply.
    (b) Requirements for public disclosure of in-network provider rates 
for covered items and services, out-of-network allowed amounts and 
billed charges for covered items and services, and negotiated rates and 
historical net prices for covered prescription drugs. A group health 
plan or health insurance issuer must make available on an internet 
website the information required under paragraph (b)(1) of this section 
in three machine-readable files, in accordance with the method and 
format requirements described in paragraph (b)(2) of this section, and 
that are updated as required under paragraph (b)(3) of this section.
    (1) Required information. Machine-readable files required under 
this paragraph (b) that are made available to the public by a group 
health plan or health insurance issuer must include:
    (i) An in-network rate machine-readable file that includes the 
required information under this paragraph (b)(1)(i) for all covered 
items and services, except for prescription drugs that are subject to a 
fee-for-service reimbursement arrangement, which must be reported in 
the prescription drug machine-readable file pursuant to paragraph 
(b)(1)(iii) of this section. The in-network rate machine-readable file 
must include:
    (A) For each coverage option offered by a group health plan or 
health insurance issuer, the name and the 14-digit Health Insurance 
Oversight System (HIOS) identifier, or, if the 14-digit HIOS identifier 
is not available, the 5-digit HIOS identifier, or if no HIOS identifier 
is available, the Employer Identification Number (EIN);
    (B) A billing code, which in the case of prescription drugs must be 
an NDC, and a plain language description for each billing code for each 
covered item or service under each coverage option offered by a plan or 
issuer; and
    (C) All applicable rates, which may include one or more of the 
following: Negotiated rates, underlying fee schedule rates, or derived 
amounts. If a group health plan or health insurance issuer does not use 
negotiated rates for provider reimbursement, then the plan or issuer 
should disclose derived amounts to the extent these amounts are already 
calculated in the normal course of business. If the group health plan 
or health insurance issuer uses underlying fee schedule rates for 
calculating cost sharing, then the plan or issuer should include the 
underlying fee schedule rates in addition to the negotiated rate or 
derived amount. Applicable rates, including for both individual items 
and services and items and services in a bundled payment arrangement, 
must be:
    (1) Reflected as dollar amounts, with respect to each covered item 
or service that is furnished by an in-network provider. If the 
negotiated rate is subject to change based upon participant, 
beneficiary, or enrollee-specific characteristics, these dollar amounts 
should be reflected as the base negotiated rate applicable to the item 
or service prior to adjustments for participant, beneficiary, or 
enrollee-specific characteristics;
    (2) Associated with the National Provider Identifier (NPI), Tax 
Identification Number (TIN), and Place of Service Code for each in-
network provider;
    (3) Associated with the last date of the contract term or 
expiration date for each provider-specific applicable rate that applies 
to each covered item or service; and
    (4) Indicated with a notation where a reimbursement arrangement 
other than a standard fee-for-service model (such as capitation or a 
bundled payment arrangement) applies.
    (ii) An out-of-network allowed amount machine-readable file, 
including:
    (A) For each coverage option offered by a group health plan or 
health

[[Page 72309]]

insurance issuer, the name and the 14-digit HIOS identifier, or, if the 
14-digit HIOS identifier is not available, the 5-digit HIOS identifier, 
or, if no HIOS identifier is available, the EIN;
    (B) A billing code, which in the case of prescription drugs must be 
an NDC, and a plain language description for each billing code for each 
covered item or service under each coverage option offered by a plan or 
issuer; and
    (C) Unique out-of-network allowed amounts and billed charges with 
respect to covered items or services furnished by out-of-network 
providers during the 90-day time period that begins 180 days prior to 
the publication date of the machine-readable file (except that a group 
health plan or health insurance issuer must omit such data in relation 
to a particular item or service and provider when compliance with this 
paragraph (b)(1)(ii)(C) would require the plan or issuer to report 
payment of out-of-network allowed amounts in connection with fewer than 
20 different claims for payments under a single plan or coverage). 
Consistent with paragraph (c)(3) of this section, nothing in this 
paragraph (b)(1)(ii)(C) requires the disclosure of information that 
would violate any applicable health information privacy law. Each 
unique out-of-network allowed amount must be:
    (1) Reflected as a dollar amount, with respect to each covered item 
or service that is furnished by an out-of-network provider; and
    (2) Associated with the NPI, TIN, and Place of Service Code for 
each out-of-network provider.
    (iii) A prescription drug machine-readable file, including:
    (A) For each coverage option offered by a group health plan or 
health insurance issuer, the name and the 14-digit HIOS identifier, or, 
if the 14-digit HIOS identifier is not available, the 5-digit HIOS 
identifier, or, if no HIOS identifier is available, the EIN;
    (B) The NDC, and the proprietary and nonproprietary name assigned 
to the NDC by the Food and Drug Administration (FDA), for each covered 
item or service that is a prescription drug under each coverage option 
offered by a plan or issuer;
    (C) The negotiated rates which must be:
    (1) Reflected as a dollar amount, with respect to each NDC that is 
furnished by an in-network provider, including an in-network pharmacy 
or other prescription drug dispenser;
    (2) Associated with the NPI, TIN, and Place of Service Code for 
each in-network provider, including each in-network pharmacy or other 
prescription drug dispenser; and
    (3) Associated with the last date of the contract term for each 
provider-specific negotiated rate that applies to each NDC; and
    (D) Historical net prices that are:
    (1) Reflected as a dollar amount, with respect to each NDC that is 
furnished by an in-network provider, including an in-network pharmacy 
or other prescription drug dispenser;
    (2) Associated with the NPI, TIN, and Place of Service Code for 
each in-network provider, including each in-network pharmacy or other 
prescription drug dispenser; and
    (3) Associated with the 90-day time period that begins 180 days 
prior to the publication date of the machine-readable file for each 
provider-specific historical net price that applies to each NDC (except 
that a group health plan or health insurance issuer must omit such data 
in relation to a particular NDC and provider when compliance with this 
paragraph (b)(1)(iii)(D) would require the plan or issuer to report 
payment of historical net prices calculated using fewer than 20 
different claims for payment). Consistent with paragraph (b)(3) of this 
section, nothing in this paragraph (b)(1)(iii)(D) requires the 
disclosure of information that would violate any applicable health 
information privacy law.
    (2) Required method and format for disclosing information to the 
public. The machine-readable files described in this paragraph (b) must 
be available in a form and manner as specified in guidance issued by 
the Department of the Treasury, the Department of Labor, and the 
Department of Health and Human Services. The machine-readable files 
must be publicly available and accessible to any person free of charge 
and without conditions, such as establishment of a user account, 
password, or other credentials, or submission of personally 
identifiable information to access the file.
    (3) Timing. A group health plan or health insurance issuer must 
update the machine-readable files and information required by this 
paragraph (b) monthly. The group health plan or health insurance issuer 
must clearly indicate the date that the files were most recently 
updated.
    (4) Special rules to prevent unnecessary duplication--(i) Special 
rule for insured group health plans. To the extent coverage under a 
group health plan consists of group health insurance coverage, the plan 
satisfies the requirements of this paragraph (b) if the plan requires 
the health insurance issuer offering the coverage to provide the 
information pursuant to a written agreement. Accordingly, if a health 
insurance issuer and a group health plan sponsor enter into a written 
agreement under which the issuer agrees to provide the information 
required under this paragraph (b) in compliance with this section, and 
the issuer fails to do so, then the issuer, but not the plan, violates 
the transparency disclosure requirements of this paragraph (b).
    (ii) Other contractual arrangements. A group health plan or health 
insurance issuer may satisfy the requirements under this paragraph (b) 
by entering into a written agreement under which another party (such as 
a third-party administrator or health care claims clearinghouse) will 
provide the information required by this paragraph (b) in compliance 
with this section. Notwithstanding the preceding sentence, if a group 
health plan or health insurance issuer chooses to enter into such an 
agreement and the party with which it contracts fails to provide the 
information in compliance with this paragraph (b), the plan or issuer 
violates the transparency disclosure requirements of this paragraph 
(b).
    (iii) Aggregation permitted for out-of-network allowed amounts. 
Nothing in this section prohibits a group health plan or health 
insurance issuer from satisfying the disclosure requirement described 
in paragraph (b)(1)(ii) of this section by disclosing out-of-network 
allowed amounts made available by, or otherwise obtained from, an 
issuer, a service provider, or other party with which the plan or 
issuer has entered into a written agreement to provide the information, 
provided the minimum claim threshold described in paragraph 
(b)(1)(ii)(C) of this section is independently met for each item or 
service and for each plan or coverage included in an aggregated Allowed 
Amount File. Under such circumstances, health insurance issuers, 
service providers, or other parties with which the group health plan or 
issuer has contracted may aggregate out-of-network allowed amounts for 
more than one plan or insurance policy or contract. Additionally, 
nothing in this section prevents the Allowed Amount File from being 
hosted on a third-party website or prevents a plan administrator or 
issuer from contracting with a third party to post the file. However, 
if a plan or issuer chooses not to also host the file separately on its 
own website, it must provide a link on its own public website to the 
location where the file is made publicly available.
    (c) Applicability. (1) The provisions of this section apply for 
plan years (in the

[[Page 72310]]

individual market, for policy years) beginning on or after January 1, 
2022.
    (2) As provided under Sec.  147.140, this section does not apply to 
grandfathered health plans. This section also does not apply to health 
reimbursement arrangements or other account-based group health plans as 
defined in Sec.  147.126(d)(6) or short term limited duration insurance 
as defined in Sec.  144.103 of this subchapter.
    (3) Nothing in this section alters or otherwise affects a group 
health plan's or health insurance issuer's duty to comply with 
requirements under other applicable state or Federal laws, including 
those governing the accessibility, privacy, or security of information 
required to be disclosed under this section, or those governing the 
ability of properly authorized representatives to access participant, 
or beneficiary information held by plans and issuers.
    (4) A group health plan or health insurance issuer will not fail to 
comply with this section solely because it, acting in good faith and 
with reasonable diligence, makes an error or omission in a disclosure 
required under paragraph (b) of this section, provided that the plan or 
issuer corrects the information as soon as practicable.
    (5) A group health plan or health insurance issuer will not fail to 
comply with this section solely because, despite acting in good faith 
and with reasonable diligence, its internet website is temporarily 
inaccessible, provided that the plan or issuer makes the information 
available as soon as practicable.
    (6) To the extent compliance with this section requires a group 
health plan or health insurance issuer to obtain information from any 
other entity, the plan or issuer will not fail to comply with this 
section because it relied in good faith on information from the other 
entity, unless the plan or issuer knows, or reasonably should have 
known, that the information is incomplete or inaccurate.
    (d) Severability. Any provision of this section held to be invalid 
or unenforceable by its terms, or as applied to any person or 
circumstance, or stayed pending further agency action, shall be 
severable from this section and shall not affect the remainder thereof 
or the application of the provision to persons not similarly situated 
or to dissimilar circumstances.

PART 158--ISSUER USE OF PREMIUM REVENUE: REPORTING AND REBATE 
REQUIREMENTS

0
7. The authority citation for part 158 continues to read as follows:

    Authority:  42 U.S.C. 300gg-18.


0
8. Section 158.221 is amended by adding paragraph (b)(9) to read as 
follows:


Sec.  158.221   Formula for calculating an issuer's medical loss ratio.

* * * * *
    (b) * * *
    (9) Beginning with the 2020 MLR reporting year, an issuer may 
include in the numerator of the MLR any shared savings payments the 
issuer has made to an enrollee as a result of the enrollee choosing to 
obtain health care from a lower-cost, higher-value provider.
* * * * *
[FR Doc. 2020-24591 Filed 11-3-20; 4:15 pm]
 BILLING CODE 4830-01-P; 4510-29-P; 4120-01-P